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COKAL LIMITED Annual Report 2016 | Page 1 of 67

ContentsCorporate Information 1Chairman’s Letter to Shareholders 2Review of Operations 4Directors’ report 12Auditor’s Independence Declaration to the Directors of Cokal Limited 23Shareholder Information 24Interests in Tenements and Projects 27Consolidated Statement of Comprehensive Income for the year ended 30 June 2016 28Consolidated Statement of Financial Position as at 30 June 2016 29Consolidated Statement of Changes in Equity for the year ended 30 June 2016 30Consolidated Statement of Cash Flows for the year ended 30 June 2016 31Notes to the Consolidated Financial Statements for the year ended 30 June 2016 32Declaration by Directors 66Independent Auditor’s Report 67

Competent Person Statement

The Total Coal Resource estimate was announced on 29 April 2016, titled “Updated JORC Resource Statement for BBM”. The information in the report relating to Mineral Resources is based on information compiled by Yoga Suryanegara who is a Member of the Australasian Institute of Mining and Metallurgy and a full time employee of Cokal Limited. Mr Suryanegara is a qualified geologist and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”.

The Company confirms that it is not aware of any new information or data that materially affects the information included in the announcement made on 29 April 2016 and that all material assumptions and technical parameters underpinning the estimates in the announcement made on 29 April 2016 continue to apply and have not materially changed.

The information in this report relating to exploration results is based on information compiled by Patrick Hanna who is a Fellow of the Australasian Institute of Mining and Metallurgy and is a consultant (through Hanna Consulting Services) to Cokal Limited. Mr Hanna is a qualified geologist and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking, to qualify as Competent Persons as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Hanna consents to the inclusion in the report of the matters based on the information, in the form and context in which it appears.

Corporate InformationDIRECTORSPeter LynchPatrick HannaDomenic MartinoAgus Widjojo

COMPANY SECRETARIESDuncan CornishVictor Kuss

REGISTERED OFFICE AND PRINCIPAL BUSINESS OFFICEBowman HouseLevel 10, 110 Mary StreetBrisbane QLD 4000 Phone: + 61 7 3212 6299Fax: +61 7 3212 6250

COUNTRY OF INCORPORATIONAustralia

SOLICITORSThomsons LawyersLevel 16, Waterfront Place1 Eagle Street Brisbane QLD 4000Phone: + 61 7 3338 7500Fax: +61 7 3338 7599

SHARE REGISTRYAdvanced Share Registry Services150 Stirling HighwayNedlands WA 6009Phone: +61 8 9389 8033Fax: +61 8 9389 7871

AUDITORSErnst & Young111 Eagle StreetBrisbane QLD 4000Phone: +61 7 3011 3333Fax: +61 7 3011 3100

STOCK EXCHANGE LISTINGAustralian Securities Exchange LtdASX Code: CKA

INTERNET ADDRESSwww.cokal.com.au

AUSTRALIAN BUSINESS NUMBER ABN 55 082 541 437


Chairman’s Letter to ShareholdersDear Shareholders,

Financial year 2016 has been one of many challenges and changes for Cokal. These challenges have been met with strong persistence and determination bythe Board and Management of Cokal Ltd.

Coking coal prices for much of the financial year have hovered at record lows, levels at which much of the industry has been loss making. This period of prolonged depressed pricing has seen some of the industry’s major players placed into chapter 11 administration or exit their assets at extreme discounts to their investment value. Many Australian producers have been faced with the prospect of having to continue to operate mines which are loss making to service take-or-pay contracts on rail and port.

During much of the financial year Cokal was occupied by the takeover bid as proposed by Indonesian listed Cakra Mineral Tbk (Cakra).

While the Bid was proceeding the approvals and government relations team were busy working through the final details of obtaining the “Borrow and Use of Forest Area Permit (Ijin Pinjam Pakai Kawasan Hutan (“IPPKH”)) or “Forestry Permit” for its 60% owned Bumi Barito Mineral Coal Project (“BBM” or “the Project”), located in Central Kalimantan. The process for obtaining the permit was changed in January 2015 by the President Joko Widodo, by making the Indonesia Indonesian Investment Coordinating Board (BKPM) responsible for overseeing the process.

While delivering many advantages over the old Forestry Ministry administered process there were significant changes which needed to be created and implemented which did cause some delays and backlog. Cokal was one of the first companies to be issued its permit under the new process in August 2015.

Meanwhile, Cokal received the bidders statement from Cakra later in the month of August and responded with our Target statement in short succession. The Cakra Bid in which many shareholders had expressed interest failed to meet the closure timing as per the Bid implementation agreement. And while waiting patiently with continued re-assurances from Cakra the bid eventually lapsed in November 2015. This left the company with the task of pursuing other funding options at a time when the coking coal market reached its absolute lowest point. Cokal’s major shareholder and debt provider, Platinum Partners, showed much patience and support to work with the company to get through these difficult times. The company remained in a period of voluntary suspension until May this year. Coking Coal prices still remained at record low levels but the team at Cokal with the continued support of Platinum Partners continued to work hard on finding a way through the difficult times.

Significant efforts were focused on reducing the ongoing costs while remaining viable and active in Indonesia’s fledgling coking coal industry. Indonesia is a country with significant promise, not only as an emerging economy and a vibrant democracy, but as a nation which promises much future and long term importance as a complementary and good neighbour for Australia. The bonds between Australia and Indonesia have continued to strengthen further with both countries working together to oppose the threats imposed by extremists to our nations’ shared values of religious tolerance and democratic freedom.

The reduction in staff numbers and costs have been made carefully, while our administrative functions have gradually been shifted to Indonesia built around our core staff of dedicated long-term employees. Operating functions in Australia have been replaced through the upskilling and training of key people in Indonesia.We have continued to rationalise our assets portfolio with the sale of interests in several non-core assets AAM, SNR and KNR. These sales have not only provided some small amounts of cash but have also reduced liabilities from the balance sheet, while maintaining our ownership of our core assets such as BBM and TBAR.

In July shortly, after the close of the financial year, the company reached agreement with Platinum Partners and shareholder Blumont to restructure its combined outstanding debt into a production royalty. The debt had become one of the most difficult issues in attempting to close some of the discussions which the company was undertaking in an effort to provide funding for a pathway to production for our premier asset, the BBM project.

We are glad to note that not long after we announced the debt restructure the spot price for coking coal began to increase very suddenly and significantly. A graph depicting this movement has been provided at the end of this letter.

At the time of drafting the annual report, interest in the Company and its assets has increased significantly. And while many are predicting the current high spot pricing, which represents a small segment of the total seaborne traded market, will not last, there is general consensus that contract pricing will increase as well. The next quarterly benchmark pricing discussions are underway, the outcome holds the first real indication as to where long-term pricing is headed. Based on this pricing trend, together with reduced costs of steel and fuel over the past 12 months, the small team at Cokal is now focused on revising the Definitive Feasibility Study and looks forward to the potential of stronger long-term pricing and its resulting impact on the NPV of the company’s ready to build fully approved BBM project.


I would also like to thank the long and dedicated service of our non-executive director Agus Widjojo, who retried to assume a very significant appointment bestowed by the president of Indonesia, our long serving previous CFO Victor Kuss and more recently Moosa Fense. I am glad to say these people remain close and helpful friends of the company available to assist when requested and share our vision and desire for Cokal to become a safe and efficient coking coal producer.

In the meantime, I welcome Garry Kielenstyn to his new role as Chief Operating Officer where he is supported by Teuku Juliansyah, Chief Financial Officer and the small but dedicated remaining team of Indonesian technical professionals.

We thank you for your ongoing support

Peter LynchChairman

The graph shown is the Dalrymple Bay Coal terminal spot pricing for coking coal, courtesy of Metal Bulletin www.metalbulletin.com.


Review of OperationsCorporateStrengthening of Platinum Partners Funding OfferOn 7 April 2016, Cokal announced that it will grant to a fund managed by Platinum Partners, 50 million options with exercise price of A$0.05 and an exercise period of 4 years from the date of grant for its past forbearance in not calling a bridging loan extended on 30 January 2015 which was due for repayment on 6 August 2015. The grant of the options was subject to shareholder approval on or before the next annual general meeting.

However, these options will be cancelled as part of debt restructuring detailed in the subsequent events.

Takeover Proposal made by PT Cakra Mineral Tbk (CKRA)As announced on 3 March 2015, Cokal Limited received an unsolicited non-binding and incomplete proposal in relation to a conditional off market takeover bid by PT Cakra Mineral Tbk (CKRA) for all of the ordinary shares of Cokal. CKRA is an Indonesian Company listed on the Indonesia Stock Exchange (IDX: CKRA). On 27 April 2015 Cakra and Cokal entered into a Bid Implementation Agreement under which Cakra would make a conditional off market takeover bid for all the shares in Cokal (Offer).

On 17 August 2015, it was announced that the Group received a Bidder’s Statement from Cakra in relation to its offer to acquire all of the shares in Cokal. The offer however is subject to Indonesian regulatory approval and to Cakra raising approximately US$113 million by way of a rights issue. On 28 August 2015, Cokal issued a Target Statement in response to Cakra’s off market takeover bid.

Cakra’s offer was closed on 15 November 2015. Based on various meetings and discussions with Cakra, Cakra’s earlier offer was lapsed due to internal commercial issues which emerged during the offer period. Cakra advised that these issues could be resolved in a timely manner, it was actively taking steps to secure a resolution and that, following resolution, Cakra intended to make a fresh bid. To date, however, Cakra has not provided any further firm guidance as to timing for resolution of its commercial issues or any fresh bid.

Cokal remains open to a transaction involving scrip consideration in an Indonesian listed entity either with Cakra or other parties.

Sale of Non-core Assets and Discussions for Potential Larger TransactionOn 16 May 2016, Cokal announced that it has entered into a non-exclusive Memorandum of Understanding (“discussions”) with Indonesian company Blackspace to enable discussions and due diligence to be undertaken with the objective of Blackspace providing funding for the development of Cokal’s Bumi Barito Mineral Coal Project (“BBM”) and or a possible corporate level transaction.

In addition, Blackspace acquired two of Cokal’s non-core tenements and Cokal has announced the completion of the sale of its 75.2% interest in PT Silangkop Nusa Raya and PT Ketungau Nusa Raya for US$160,000 and PT. Jinantra Karya Raya the Indonesian company that recently acquired Cokal’s 75% interest in PT Anugerah Alam Manuhing. Cokal considers this a sale of isolated non-core tenements located a considerable distance west and north, in another geological formation, from Cokal’s main tenements located in Central Kalimantan. It was therefore considered appropriate in the current climate to realize this value and to use the funds for working capital. The sale of AAM and the planned additional sales of other non-core tenements along with the possible additional development funding has enabled Cokal to develop a constructive working relationship with a party which shares Cokal’s belief in the potential and significances of Indonesia’s coal projects. This may in turn enable Cokal to successful restructure its statement of financial position and start construction on BBM. These initial discussions have received the support of Platinum Partners, Cokal’s largest shareholder and the debt provider.

AssetsIndonesian Coal ProjectsThe status of the Company’s ownership in its Indonesian coal projects is summarised:• 60% of the shares in companies which own the BBM and Borneo Bara Prima (BBP) projects located in Central

Province, Kalimantan, Indonesia. The BBM project area comprises approximately 15,000ha and the BBP project comprises approximately 13,050ha.


• Cokal has entered into an agreement to acquire 75% of the shares in the company PT Tambang Benua Alam Raya (TBAR) which own an exploration tenement covering an area of approximately 18,850ha. This tenement is adjacent to the company’s BBM project.

• 75% of the shares in companies which own the Anugerah Alam Katingan (AAK) project is also located in Central Province, Kalimantan, Indonesia. The AAK project area comprises 5,000ha. Applications for the Exploration Forestry Permit (IPPKH) and Clean and Clear Certificates continue to be processed. Following official handover letter (dated 12 January 2016), AAK IUP is currently on ‘on-hold’ status by Provincial Police Department (Polda Kalteng). It is being decided by police following their investigations re ‘AAK ownership dispute’ issues. Cokal is an aggrieved party and will await the outcome of the Police investigation into a period predating Cokal’s interest in the Project.

• Cokal has sold its 75.2% share in the company PT Anugerah Alam Manuhing (the “AAM”).• Cokal has entered into an agreement to sell its 75.2% share in the company PT Silangkop Nusa Raya (SNR) which

owns three exploration licences and in the company PT Ketungau Nusa Raya (KNR) which owns two exploration licences. The projects are located in West Kalimantan. SNR project covers a total area of approximately 11,705ha and KNR project covers a total area of 4,300ha. Cokal’s share divestment sale on both of these projects is in progress.

BBM, BBP, AAK, and TBAR are within the highly prospective Central Kalimantan coking coal basin, and are located adjacent to Indomet’s extensive coking coal tenements.

Exploration BBM Project BBM covers an area of 14,980 hectares (ha), immediately adjacent to BHP Billiton’s Juloi tenement, straddling the Barito River and has numerous outcrops of bright coal.

Cokal has been actively working on BBM project and awaiting for project funding for further construction, development and production to commence. In January 2016, Cokal’s geologists reviewed the coal quality results from the outcrop samples acquired during the detail mapping survey of the two open cut pits planned in the vicinity of the Barito River.

Although the samples were of oxidised coal, the physical attributes of the coal samples had not changed and therefore these results were deemed by the Competent Person as valid data in determining the confidence in the coal estimation.

Consequently, on 29 April 2016, Cokal announced and updated JORC Resources Statement for the BBM Project. Although the total Resource estimate remains at 266.6Mt for BBM the Coal Resources categories of Measured and Indicated were increased to 19.5Mt Measured and 23.1Mt Indicated Resources. Both open cut pits are now covered by either Measured or Indicated Coal Resources.

Details of the findings from the Resource Report are summarised in the following.

JORC Code StatementsOn 29th of April 2016, Cokal announced and updated JORC Resources Statement for the BBM Project. The updated Coal Resource statement is only for the Eastern portion of the Bumi Barito Mineral (BBM) coal project.The highlights of this resources statement report included:• Coal Resources Statement is in accordance with the JORC Code (2012)• The Resource Report, which was compiled by Cokal’s Competent Person, and is compliant with the 2012 version

of the JORC Code.• Total Resource estimate remains at 266.6Mt for BBM comprising 90% Coking Coal and 10% PCI.• Comprised of 19.5Mt Measured and 23.1Mt Indicated Resources• Re-confirmation of in-ground quality B, C and D seams suitable for Direct-to-ship.• B, C and D coking and PCI product have premium qualities consisting low ash, low sulphur, low moisture and ultra-

low phosphorous.• Low volatile PCI and medium to low volatile coking coal suited to nearby Asian Markets.• Large portion of BBM Resources is amenable to underground mining due to very favourable ground condition.


The total Resource estimate (266.6Mt) remains unchanged compare to last year BBM coal resource statement, comprising of 19.5Mt in Measured, 23.1Mt indicated and 224Mt Inferred Coal Resources in accordance with the 2012 JORC Code (see table 1 and 2).

The Coal Resources for BBM have been estimated in accordance with the 2012 version of the JORC Code. The area covered by the current Coal Resource estimate is 30% of the total area of the BBM Production IUP tenement license.

The coal resource has been confirmed as a metallurgical coal from analyses conducted both in an Australian and Indonesian laboratory and is comprised of 90% coking coal and 10% PCI coal.

This updated report demonstrates that after further review of the analytical results for Seams B, C and D outcrop samples, both coking coal and PCI are suitable for Direct-to-Ship extraction due to very low ash content of the three seams.

Due to the reliable representative sampling from the outcrop channel samples, the B, C and D Seams have displayed consistent low ash contents of between 2% and 7% with the average around 4%. This result is in contrast to the higher ash contents recorded in the nearby borehole samples which are now considered to be most likely highly contaminated by the use of drill muds and non-coal material which collapsed in the borehole from above the seams. It is believed that this contamination resulted in the anomalously high ash results for the core samples.

It can be demonstrated that BBM can produce premium quality PCI and coking coals (see Tables 3 and 4). The PCI product has low Ash (generally between 3% and 7%) as well as low Volatiles (generally below 10%). The high Calorific Value (7,500 to 8,200Kcal/ Kg), together with the low Sulphur (0.4%) and ultra-low Phosphorus (0.005%), make this PCI coal a very attractive premium product in the Asian PCI markets, particularly Vietnam.

Similarly, the majority (95%) of the coking coals in BBM have premium qualities including low Ash, low Sulphur and ultra-low Phosphorus. In the case of Seams B, C and D, the raw ash of the coal in situ ranges from 3% to 7% with a coke swelling index (CSN) of 9. The Volatiles are generally low (18% to 20%) which is ideal for most Asian steel producers, particularly in China.

Table 1 BBM Coal Resources by JORC Category and seams

Seam Name

Seam Thickness

(m)

MeasuredResources

(Mt)

Indicated Resources

(Mt)

Inferred Resources

(Mt)

And seams

J 1.33 10.50 13.5 31 55.00D 1.34 3.53 3.5 70 77.03C 1.23 2.62 3.1 66 71.72B 1.10 2.85 3.0 57 62.85

Total 19.50 23.1 224 266.6

Table 2: BBM Coal Resources by Category and Depth of Cover

Depth Range(m)

MeasuredResources

(Mt)

Indicated Resources

(Mt)

Inferred Resources

(Mt)

Total Resources

(Mt)

0-50 10.33 3.0 1 14.33

0-100 17.17 11.3 9 37.47

0-150 19.31 19.7 25 64.01

0-200 19.50 22.5 42 84.00

0-250 19.50 23.0 67 109.52

0-300 19.50 23.1 100 142.60

>300m 19.50 23.1 224 266.6


As part of coal resources evaluation, a 2016 updated report of the BBM Underground Mining Project Central Kalimantan Indonesia Scoping Study in the BBM East Block is also substantially completed. This Scoping Study report outlines the concept and rationalization of a proposed underground mine plan for the East Block of BBM.

The remainder Inferred Coal Resources in East BBM for Seams D and J are considered amenable to modern underground mining extraction methods. The coal seams are generally thicker than 1m and the roof predominantly consists of very hard sandstone (up to 95Megapascals (MPa)) while the immediate 1m to 2m of roof consists generally of a competent siltstone.

This combination is ideal for extraction of the deeper Coal Resources using underground methods such as thin-seam long-wall mining. The Scoping Study has identified the potential for four (4) large underground mining blocks utilising the longwall method of extraction of both the ‘D’ and ‘J’ seams.

Table 3: Seam B, C and D Coal Quality by Type (%adb)

Product SeamInherent Moisture

%

Ash%

VolatileMatter

%

Fixed Carbon

%

Total Sulphur

%

Calorific Value

(Kcal/kg)

Relative Density(g/cc)

Phos-phorus

%

COKING 2 – 4.5 2 15 – 19 75 – 80 0.36 7450 –8200 1.32 0.005

PCID

2 3 9 85 0.48 8150 1.36 0.001

COKING 1.5 – 6 3 15 – 20 70 – 80 0.35 7050 – 8050 1.33 0.004

PCIC

1.5 3.5 9 85 0.44 8250 1.36 0.002

COKING 1.5 – 5 3 15 – 19 75 – 80 0.34 7350 – 8150 1.33 0.004

PCIB

1.5 7 9 80 0.47 7750 1.38 0.005

Table 4: Coal Quality of J Seam (% adb)

Product Yield Inherent Moisture Ash Volatile

MatterFixed Carbon

Total Sulphur

Calorific Value Kcal/kg

CSN Relative Density

Phos-phorus

Raw Coal 100 1.0 13.2 17.6 68.2 0.38 7,412 9 1.39 0.007

Washed Coal 81 0.7 5.3 18.1 76.0 0.42 8,300 9 1.32 N/A


Board of Directors

Senior Management

Moosa Fense – Chief Financial Officer (Appointed 1 September 2015 and resigned 24 June 2016)

Peter Lynch Mining EngineerNon-Executive Chairman (Appointed on 24 June 2016)

Previous President, CEO and Director of Waratah Coal, also General Manager Oaky North coal mine.

Patrick Hanna Executive Director, Geologist

Vast worldwide coal exploration experience.

Domenic Martino Non-Executive Director

Experienced junior exploration company director and past CEO of Deloitte Touche Tohmatsu in Australia.

Victor KussManager Corporate Restructure

Financial commercial and corporate experience with major international and listed junior companies.

Lieutenant General (Retired) Agus Widjojo Non-Executive Director (Appointed 14 August 2013, Resigned 10 May 2016)

Well respected amongst Indonesia’s leaders and is considered a key contributor in the development of Indonesia’s international ties on various levels. Currently Chairman of the Centre for Policy Studies & Strategic Advocacy (CPSSA), a Jakarta based think tank.

Garry KielenstynChief Operating Officer (Appointed 24 June 2016)

Project, Production, General and Area Manager experience. Veteran of the Indonesian mining and civil contracting industries, based in Kalimantan, living and working in Indonesian since 1990.

Teuku JuliansyahChief Financial Officer &Joint Company Secretary(Appointed 24 June 2016)

Over 8 years practical experience in finance roles involving finance policy and procedure strategy, and implementation, accounting, budgeting, auditing and other financial consulting type of work.


Bumi Barito Mineral ProjectBBM Definitive Feasibility Study Outcomes The BBM Project definitive feasibility study (DFS) was completed in February 2014. During 2016 further pricing and delivery enquiries were made to ensure that physical delivery and construction would comply with DFS Schedule. The DFS is focused on the initial 2 Million tonnes per annum (Mtpa) with a direct ship start-up phase. All approvals and government processes have been submitted to allow development of an operation of up to 6Mtpa capacity.

The additional pricing enquiry related to fuel, construction steel, as well as the availability of suitable pool of experienced and competent contractors to commence construction in a timely manner. Discussions were principally held with contractors currently operating in the region who were well acquainted with local conditions, logistics and supply issues.

Discussions were also held with some small-sized contractors in the area and who are currently operational on small-scale projects in a competent and efficient manner. The intent is to use local contactors where possible as a part of Cokal’s Corporate Social Responsibility (CSR) program.

Haul RoadThe full length of the 55km haul road has been formally pegged and surveyed in conjunction with the Forestry Department, local village leaders and villagers

A land usage and ownership survey for the entire length of haul road has been successfully completed with positive contributions from the local government and local land owners.

Barge Loading FacilityLand acquisition arrangements for the Purnama Port are essentially completed. The 150ha site has been identified as available and appropriate for acquisition following discussions with local land owners. The land owners and local citizens are very supportive towards Cokal for the construction and operation to commence as soon as possible in order to provide employment opportunities of either supply of materials (building sand etc) or direct hire labour.

River BargingCokal continues to maintain the relationship with MDM Meratus Line and the selected shipyards keeping them informed of the current situation. This allows us to continually identify construction “slots” and relative price changes largely due to the price of steel.

Both MDM Meratus and Cokal are receiving informal enquiries regarding the barging system some of the largest Indonesian mining companies. While this system is innovative for Indonesia barging companies, it forms the basis of bulk material movement for many countries around the world and is being recognised as such.

River Trans-loading Station and Intermediate stockpileThe river based trans-loading system has been designed to serve the dual function of performing the in-loading system of the Intermediate stockpile facility when it is built. This allows the majority of the capital cost of the intermediate stockpile facility to be delayed enough to be funded out of project cashflows rather than in advance.

Selection of the site of the trans-loading stockpile facility continues to be conducted with a number of potential sites available.

External Relations

BBM Forestry Permit – UpdateOn 12 August 2015, Cokal received the Borrow and Use of Forest Area Permit IPPKH (Ijin Pinjam Pakai Kawasan Hutan) for an initial operational area of 1,242 ha in BBM (Bumi Barito Mineral) Coal Project from the Investment Coordinating Board (BKPM) Jakarta.

The issuance of the Forestry Permit concludes the final approval process necessary to allow the Company to start construction and mining. In addition to the forestry permit, Cokal has an approved mining license and full environmental approval for up to 6Mtpa of coal extraction.

An Initial area of approximately 1,242 ha has been approved by the Forestry Department covering the operation of the port, haul road and the initial mine site. In accordance with standard Mining Department practice, the initial operational area is reviewed by the Department and extended as required to meet the planned mine development.


Cokal is continuing their efforts to fulfil its obligations under the Forestry Permit, including the plantation of trees along the Barito riverbanks area (DAS) for total approx. 1,500 ha and located in the same regency. Discussions continue with the relevant authorities: Management Board of Barito River / BP DAS Barito and Forestry Offices in Regency and Provincial level. As part of its technical plans, a Social Map will be conducted by Cokal to ensure this DAS rehabilitation programme is being acknowledged and supported by the surrounding community.

BBM IUP PermitFollowing the latest Indonesian regulations on mining permits (PP 77/2014) which stated that regency has no longer authorities in mining business arrangements, all BBM permitting process will be handed over to Central Mine Office (ESDM Jakarta). This process is expected to be implemented in Q1-2017.

BBM Port Construction and Operation ApprovalThe approval of the PT BBM Port Construction and Operation was received from the National Transportation Minister on 24 February 2015. Commencement of construction and operation of the port is awaiting project financing.

BBP Production Approval Advances – UpdateAs officially informed by ESDM Jakarta on 15 January 2016, BBP now has obtained its status as Production Mining Permit (IUP-Operation Production). This will be valid from 22 December 2014 until 03 June 2033.

Safety and HealthAs Safety & Health are both a key and integral part of our strategy to become a significant participator in the metallurgical coal sector, Cokal has implemented significant measures during the year which resulted in the following outcomes: Zero LTI and Zero Fatality performances for 2013 – 2016 period.

Again received a formal commendation from the Provincial Government for both the standard and compliance of reporting with BBM achieving the highest compliance score of the more than 60 IUP’s operating in the Regency.

Regular inspection protocols of equipment and facilities on a regular basis including Work Place Inspection, Camp & Facility Inspection, Fire Extinguisher Inspection, Fire Alarm Inspection, Vehicle Inspection, Speed Boat Inspection, Generator House Inspection , Water Treatment Inspection, Road & Bridge Inspection, Clinic Inspection & Hygiene Inspection. At least 4 times of inspections are conducted in monthly basis.

Complete Health, Safety and Environmental Induction process for all employees, contractors and visitors including specific inductions for water transport and site flora and fauna protection. Currently total approx. 570 persons have been inducted during 2013 – 2016 period.

Health and Safety awareness campaigns carried out on a regular basis including daily and weekly meetings, including/mainly Safety Talk sessions in all BBM offices (at Krajan Site, Purukcahu, and Jakarta Office).

Providing safety socialisations to local community who access BBM mine area for their farming activities.

EnvironmentalSound management of the environment is a critical part of Cokal’s strategy in becoming a global supplier in the metallurgical coal sector. In developing a high level work practices in order to establish environmental compliance, a number of key steps have been undertaken during the year including:

The continuation of baseline water and environmental monitoring at the BBM project area. For pH monitoring, it is conducted on bi-monthly basis. Impacts from seasons (dry season and rainfall season) and also local activities (illegal mining activities in upstream area) are key factors to this pH condition at BBM site.

The continuation of the environmental awareness programme aimed at “grass roots” level and presented in such a manner that it is easily comprehendable to surrounding community with limited education. Topics include forest burning, illegal logging, gold sluicing and rubbish disposal which are critical issues in this area.

The monitoring of an authorised waste storage area. The drums, batteries and waste oil were taken by a licenced hazardous materials contractor and taken to an approved and registered disposal facility in Banjarmasin. In addition, an ongoing contract has been established with the licenced operator to remove drums and waste oil from the PT BBM site so that we comply with the maximum on site storage time of 3 months. A Register of Hazardous material has been established in order to ensure that hazardous material is disposed of correctly.


Community DevelopmentCokal continues to implement its Corporate Social Responsibility (CSR) program. To date Cokal has undertaken the following programs:

Support for Orangutans Release Programme conducted by Borneo Orangutan Survival Foundation (BOSF). From 11-24 April 2016, Orangutans transit cages and accommodation for BOSF dedicated staff were provided on site at BBM’s Krajan camp during this release programme. There are total 12 OUs released at Betikap Protection Forest areas (upstream Barito River)approximately 150 kilometres north east of the BBM mine site. Cokal is the only mining company which supports this programme, and both parties will continue its partnerships, including plans for supporting HSE trainings and SOPs for BOSF.

Continuation of the sponsorship of the three teachers at Tumbang Tuan Junior High School. This school was previously established by Cokal in 2012 and the continuation of the sponsorship allows the school to remain open.

Continuation of the University scholarships program for 12 local students across a range of faculties at Palangkaraya University including finance, law, agriculture and engineering.

Continuation of the University of Palangkaraya mining faculty partnership. This program includes Cokal providing regular lectures to the Mining faculty undergraduate program.

Providing support to various cultural, religious and community based activities.

Continuation with provision of medical and paramedic support to local villages in the vicinity of the PT BBM Project.


Directors' Report Your Directors present their report for the year ended 30 June 2016.

The following persons were Directors of Cokal Limited (“Group”, “consolidated entity” or “Cokal”) during the financial year and up to the date of this report, unless otherwise stated:

Peter Lynch, Executive Chairman (Appointed on 24 December 2010, Resigned on 24 June 2016)(Appointed Chief Executive Officer on 5 May 2013, Resigned on 24 June 2016)(Appointed as Non-Executive Chairman on 24 June 2016)B.Eng (Mining)Since graduating with a Mining Engineering degree in 1988, Mr Lynch has held various positions, within the coal industry in Australia, as mining engineer, project manager, mine manager, general manager and managing director culminating most recently in the role, from January 2006 until January 2010, as the President, CEO and Director of Waratah Coal Inc., a TSX listed company which was taken over by the Mineralogy Group in December 2008, having reached a peak market capitalisation of CAD300 Million. Other highlights include: Mining Engineer, 52, over 30 years’ experience mainly

in coal.

Proven track record in coal project evaluation, development and operation.

Responsible for design and construction of one of Australia’s best producing longwall projects, Oaky North.

Ex-CEO of Waratah Coal responsible for putting the Galilee basin on the map, visionary development plan.

Ex-MD APC, MacArthur Coal operating entity expanded to 6Mtpa.

Strong following in Nth American Capital Markets, WCI.TSX-V.

Currently a director of WCB Resources Limited (TSX-V:WCB).

Peter is a member of the Audit Committee.

During the past three years Peter has not served as a director of another listed company.

Patrick Hanna, Executive Director (Appointed on 24 December 2010)B. Applied Science (Geology), CP, FAusIMMMr Hanna has over 33 years’ experience as a coal geologist in the areas of exploration and evaluation including planning, budgeting and managing drilling programs in Australia and Indonesia, gained since graduating from the University of New South Wales in 1976. Mr Hanna has authored and co-authored numerous coal industry publications.

Geologist, 62, over 33 years’ experience all in coal.

Extensive experience in Indonesian coal.

Exploration Manager for Riversdale Mining, principal responsibility for discovery and documentation of new coking coal basin in Mozambique.

Ex-member of JORC committee.

Principal Geologist SRK Australia for 6 years.

Author of 19 technical publications.

Reviewed and consulted on over 40 coal projects globally.

Highly experienced and respected.

Patrick is a member of the Audit Committee.

During the past three years Patrick has not served as a director of another listed company.

Domenic Martino, Non-Executive Director(Appointed on 24 December 2010)B. Bus, FCPAMr Martino is a Chartered Accountant and an experienced director of ASX listed companies. Previously CEO of Deloitte Touch Tohmatsu in Australia, he has significant experience in the development of "micro-cap" companies. Former CEO Deloitte Touche Tohmatsu Australia.

Key player in the re-birth of a broad grouping of ASX companies including Sydney Gas, Pan Asia, Clean Global Energy, NuEnergy Capital.

Strong reputation in China.

Lengthy track record of operating in Indonesia, successfully closed key energy and resources deals with key local players.

Proven track record in capital raisings across a range of markets.

During the past three years Domenic has also served as a Director of the following ASX listed companies: Pan Asia Corporation Limited* (since 24 December

2010)

Synergy Plus Limited* (since 7 July 2006)

Australasian Resources Limited* (since 27 November 2003)

ORH Limited* (since 6 May 2009)

Clean Global Energy Limited (appointed 9 October 2009, resigned September 2012)

South Pacific Resources Limited (formally Coral Sea Petroleum Limited)* (appointed 3 August 2012)

MUI Corporation Limited (MUI) (appointed 19 December 2013)*

* denotes current directorship

Domenic is the Chairman of the Audit Committee.


Lt. General (Ret.) Agus Widjojo, Non-Executive Director (Appointed on 14 August 2013, resigned 10 May 2016)Mr Widjojo graduated from the Indonesian Armed Force Academy in 1970. He holds a Master’s Degree in Military Art and Science from the National Security Strategy of the US army Command and General Staff College, Leavenworth WA and a Master Degree of Public Administration from the George Washington University.

He is a well-respected amongst Indonesia’s leaders and is considered a key contributor in the development of Indonesia international ties on various levels.

Highlights include: Served as a staff officer in the International

Commissioner for Control and Supervision in Vietnam 1973 and with the Indonesian Battalion with UNED II in Sinai in 1975.

Command of an airborne infantry battalion and bridged and Command of TNI Command and Staff College (SESKO TNI).

Assistant for General Plans and Strategic Policies of TNI Command in 1998.

Vice Chairman of the national Parliament and leading participant in deliberation leading the reform of Indonesian armed force in the post-Suharto year and transition to democracy.

Vice Chairperson of the Executive Board of Parties for Governance Reform, a Senior Fellow at CSIS Jakarta, a member of the advisory Board of the Institute of Peace and was a deputy of the President Policy implementation.

Unit and the Indonesian representative on the Indonesia-Timor Commission of Truth and Friendship.

Chairman of the Centre for Policy Studies and Strategic Advocacy (CPSSA).

During the past three years Agus has not served as a director of another listed company.

The following persons were Company Secretaries of Cokal Limited (“Group”, “consolidated entity” or “Cokal”) during the financial year and up to the date of this report, unless otherwise stated:

Victor Kuss, Chief Financial Officer (CFO) and Joint Company Secretary (Appointed on 5 September 2011 and resigned on 1 September 2015), currently Manager Corporate Restructure (appointed 1 September 2015) BComm, CAVictor Kuss is an experienced CFO with significant exposure to listed resources companies and has a strong track record in the successful growth and development of resources and resource related companies.

Mr Kuss has significant experience in M&A activities and capital raising. He has also worked extensively in a number of overseas mining and resources related operations. Mr Kuss is a Chartered Accountant and has a Masters in Economics.

Teuku Juliansyah, Chief Financial Officer (CFO) and Joint Company Secretary (Appointed on 24 June 2016) Over 8 years practical experience in finance roles involving finance policy and procedure strategy, and implementation, accounting, budgeting, auditing and other financial consulting type of work.

Duncan Cornish, Joint Company Secretary(Appointed on 24 December 2010)B.Bus (Accounting), CADuncan is an accomplished and highly regarded corporate administrator and manager. He has many years’ experience in pivotal management roles in capital raisings and stock exchange listings for numerous companies on the ASX, AIM Market of the London Stock Exchange and the Toronto Stock Exchange.

Highly skilled in the areas of Group financial reporting, Group regulatory, secretarial and governance areas, business acquisition and disposal due diligence, he has worked with Ernst & Young and PricewaterhouseCoopers both in Australia and the UK.

Duncan is currently Company Secretary and CFO of other listed companies on the ASX and TSX-V where he has assisted in their listing and capital raising. He is supported by a small experienced team of accountants and administrators.

Interests in Shares and OptionsAt 30 June 2016, the interests of the Directors in the shares of Cokal Limited are shown in the table below. No directors held options as at the date of this report.

Ordinary Shares

Peter Lynch 25,920,800

Patrick Hanna 25,800,000

Domenic Martino 31,920,001

Agus Widjojo -

Principal ActivitiesThe principal activities of the consolidated entity during the financial year were focused on the identification and development of coal within the highly prospective Central Kalimantan coking coal basin in Indonesia.

Operating ResultsFor the year ended 30 June 2016, the loss for the consolidated entity after providing for income tax was US$30,329,717 (2015: US$13,044,047).

The operating results have been heavily driven by a US$25.7m (2015:$5.25m) de-recognition of pre-tenure exploration expenditures. In addition the other main driver was loss on sale of tenements US$1.7m (2015: nil).

More detail on the program is included separately in the Annual Report particularly in the ‘Review of Operations’ and ‘Chairman’s Letter to Shareholders’ sections.


Dividends Paid or RecommendedThere were no dividends paid or recommended during the financial year.

Review of OperationsDetailed comments on operations and exploration programs up to the date of this report are included separately in the Annual Report under Review of Operations.

Review of Financial ConditionCapital StructureDuring the year, Cokal did not issue any shares. At 30 June 2016, the consolidated entity had 499,342,704 ordinary shares and 60,150,000 unlisted options on issue.

Financial PositionThe net assets of the consolidated entity have decreased by US$30,049,101 from US$50,172,612 at 30 June 2015 to US$20,123,511 at 30 June 2016. This decrease has largely resulted from de-recognition of exploration expenditures.

The consolidated entity’s working capital, being current assets less current liabilities has decreased from (US$7,341,869) in 2015 to (US$14,290,488) in 2016. The decrease is primarily driven by a reclassification of loan to current.

The full amount of Platinum loan was repayable on 6 August 2015. The extension is still being negotiated and no demand for repayment has been received. Subsequent to year end the Directors announced Cokal had reached an agreement with Blumont Group and Platinum Partners for the conversion of all outstanding loans owing to them to production royalties. The parties are working to finalise these arrangements at this date.

Treasury PolicyThe consolidated entity does not have a formally established treasury function. The Board is responsible for managing the consolidated entity’s finance facilities.

Some goods and services purchased by the consolidated entity, along with the payments made to the vendors of the Kalimantan coal projects, are in foreign currencies (AU dollars or Indonesian Rupiah).

The consolidated entity does not currently undertake hedging of any kind.

Liquidity and FundingThe consolidated entity believes it has sufficient access to funds (see below) to finance its operations and exploration/development activities, and to allow the consolidated entity to take advantage of favourable business opportunities, not specifically budgeted for, or to fund unforeseen expenditure.

Significant Changes in the State of AffairsAs announced on 3 March 2015, Cokal Limited received an unsolicited non-binding and incomplete proposal in

relation to a conditional off market takeover bid by PT Cakra Mineral Tbk (CKRA) for all of the ordinary shares of Cokal. CKRA is an Indonesian Company listed on the Indonesia Stock Exchange (IDX: CKRA). Cakra's closed on 15 November 2015. Based on various meetings and discussions with Cakra, Cakra's earlier offer lapsed due to internal commercial issues which emerged during the offer period. Cakra advised that these issues could be resolved in a timely manner, it was actively taking steps to secure a resolution and that, following resolution, Cakra intended to make a fresh bid.

To date, however, Cakra has not provided any further firm guidance as to timing for resolution of its commercial issues or any fresh bid. Cokal remain in continuing discussions of a confidential and incomplete nature with Cakra in relation to its capacity and intentions. Cokal remains open to a transaction involving scrip consideration in an Indonesian listed entity either with Cakra or other parties.

On 7 April 2016 Cokal announced that it will grant to a fund managed by Platinum Partners, 50 million options with an exercise price of A$0.05 and an exercise period of 4 years from the date of grant for its past forbearance in not calling a bridging loan extended on 30 January 2015 which was due for repayment on 6 August 2015. The grant of the options is subject to shareholder approval on or before the next annual general meeting. However, these options were not issued at 30 June2016.

Significant Events after the Reporting Datea) On 22 July it was announced, Cokal has reached

agreement with Platinum Partners Value Arbitrage Fund, LP (Platinum) to convert approximately USD15 million of loans owing by Cokal to various funds managed by Platinum or its affiliates (the Platinum Group). Those loans include the Blumont loan, which was acquired by the Platinum Group.

The agreed conversion terms and conditions are as follows.

In consideration for the restructuring of the debt, Platinum will be entitled to a royalty on coal sold from Cokal’s share of production from the Bumi Barito Mineral Project (BBM) and PT Tambang Benua Alam Raya (TBAR) projects.

The royalty will be 1% of the realized selling price (FOB) (i.e. selling price per tonne x tonnes sold x 1%) up to a maximum royalty amount of USD40 million.

Cokal or its related parties will have the right to buy out the royalty at any time for the amount of USD40 million less amounts paid on the royalty at that time.

Cokal will do what is legally possible to attach the royalty directly to the tenement asset (IUP not the IUP holding company) or other legal instrument, so that Platinum is protected against any forced sale.

The existing security will remain in place to secure the royalty until replaced by a specific


royalty security. Platinum and Cokal will work together to replace the existing security with a direct royalty security over the IUP licenses to specifically secure the royalty subject to appropriate legal advice.

All Shares controlled by Platinum will be escrowed for 24 months from the date of conversion unless Cokal finds an alternative buyer or Platinum finds a buyer acceptable to Cokal.

All Platinum’s existing Cokal options will not be exercised or otherwise will be cancelled.

Cokal will issue 75 million new options to Platinum with a 5 year term and strike price of AU$ 1.6 cents (A$0.016)

The transaction is subject to any necessary regulatory approvals or shareholder approvals required under the Listing Rules.

Formal agreements and documents are being prepared to give effect to the above. b) On 22 July it was announced:

- Cokal has made a private placement to Ramornie Capital Ltd and its associates. The funds raised will provide working capital for the Company which will enable it to continue to develop funding opportunities for its Indonesian projects. The Company will issue 75 million fully paid ordinary shares in Cokal Ltd at a price of AU$ 0.016 (USD0.012) per share, raising AU$ 1.2 million (USD0.9 million). There were no fees payable by Cokal in relation to the placement.

c) On 8 August 2016 it was announced that Cokal Limited (ASX:CKA, “Cokal” or “the Company”) is pleased to announce that due to the interest in the AU$1.2 million (USD0.9 million) private placement previously announced on 22 July 2016 it has been decided to increase the private placement by AUD0.3 million (USD0.22 million) to AU$1.5 million (USD1.12 million). The placement will provide working capital for the Company which will enable it to continue to develop funding opportunities for its Indonesian metallurgical coal projects. The Company will issue 18.75 million fully paid ordinary shares in Cokal Ltd at a price of AU$0.016 (USD0.012) per share, raising AU$0.3 million (USD0.22 million). There were no fees payable by Cokal in relation to the placement. On issue, the placement shares will rank equally with all other ordinary shares then on issue.

Future Developments, Prospects and Business StrategiesLikely developments in the operations of the consolidated entity and the expected results of those operations in subsequent financial years have been discussed where appropriate in the Annual Report under Review of Operations.

There are no further developments of which the Directors are aware which could be expected to affect the results of the consolidated entity’s operations in subsequent financial years.

Business ResultsThe prospects of the Group in developing their properties in Indonesia may be affected by a number of factors. These factors are similar to most exploration companies moving through exploration phase and attempting to get projects into production. Some of these factors include: Exploration - the results of the exploration activities

at the BBM project and the tenements in Central Kalimantan may be such that the estimated resources are insufficient to justify the financial viability of the projects.

Regulatory and Sovereign - the Group operates in Indonesia and deals with local regulatory authorities in relation to the operation and development of its properties. The Group may not achieve the required local regulatory approvals or they may be significantly delayed to enable it to commence production.

Funding - the Group will require additional funding to move from the exploration/development phase to the production phase of the BBM project and the tenements in Central Kalimantan. There is no certainty that the Group will have access to available financial resources sufficient to fund its capital costs and/or operating costs at that time.

Development - the Group is involved in developing greenfield projects in Indonesia which could result in capital costs and/or operating costs at levels which do not justify the economic development of the project.

Market - there are numerous factors involved with early stage development of its properties such as the BBM project, including variance in commodity price and labour costs which can result in projects being uneconomical.

Environmental IssuesThe consolidated entity is subject to environmental regulation in relation to its exploration activities in respective countries. Indonesia where the company’s main project is located the principal laws are Act No.41 of 1999 regarding Forestry (the Forestry Law), Act No.4 of

2009 regarding Minerals and Coal Mining (the Mining Law) and Act No. 32 of 2009 regarding Environmental Protection and Management (the Environment Law). There are no matters that have arisen in relation to environmental issues up to the date of this report.

Non-audit ServicesThe following non-audit services were provided by the Cokal’s Auditor, Ernst & Young. The Directors are satisfied thkat the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised.

No non-audit services provided by Ernst & Young for current and previous years.


Remuneration Report (Audited) This remuneration report for the year ended 30 June 2016 outlines the remuneration arrangements of the Group in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This information has been audited as required by section 308(3C) of the Act.

The remuneration report details the remuneration arrangements for key management personnel (KMP) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the consolidated entity.

For the purposes of this report, the term “executive” includes the Executive Chairman, Chief Executive Officer, directors and other senior management executives of the Group included in this report.

Remuneration report approval at FY15 AGMThe FY15 remuneration report received positive shareholder support at the FY15 AGM with proxy votes of 63% in favour (of shares voted).

Remuneration PolicyThe performance of the consolidated entity depends upon the quality of its directors and executives. To prosper, the consolidated entity must attract, motivate and retain highly skilled directors and executives.

The Board does not presently have Remuneration and Nomination Committees. The directors consider that the consolidated entity is not of a size, nor are its affairs of such complexity, as to justify the formation of any other special or separate committees at this time. All matters which might be dealt with by such committees are reviewed by the directors meeting as a Board.

The Board, in carrying out the functions of the Remuneration and Nomination Committees, is responsible for reviewing and negotiating the compensation arrangements of senior executives and consultants.

The Board, in carrying out the functions of the Remuneration and Nomination Committees, assess the appropriateness of the nature and amount of remuneration of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team. Such officers are given the opportunity to receive their base remuneration in a variety of forms including cash and fringe benefits. It is intended that the manner of payments chosen will be optimal for the recipient without creating undue cost for the consolidated entity.

The consolidated entity aims to reward the Executive Directors and senior management with a level and mix of remuneration commensurate with their position and responsibilities within the consolidated entity. The Board’s policy is to align director and executive objectives with shareholder and business objectives by providing a

fixed remuneration component and offering short and/or long-term incentives as appropriate.

In accordance with best practice corporate governance, the structure of non-executive directors, Executive Directors and senior management remuneration is separate and distinct.

Non-executive Director RemunerationThe Board seeks to set aggregate remuneration at a level which provides the consolidated entity with the ability to attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.

The Constitution of Cokal Limited and the ASX Listing Rules specify that the non-executive directors are entitled to remuneration as determined by the consolidated entity in a general meeting to be apportioned among them in such manner as the Directors agree and, in default of agreement, equally. The aggregate remuneration currently determined by Cokal Limited is AU$500,000 (USD371,300) per annum. Additionally, non-executive directors will be entitled to be reimbursed for properly incurred expenses.

If a non-executive director performs extra services, which in the opinion of the directors are outside the scope of the ordinary duties of the director, the consolidated entity may remunerate that director by payment of a fixed sum determined by the directors in addition to or instead of the remuneration referred to above.

However, no payment can be made if the effect would be to exceed the maximum aggregate amount payable to non-executive directors. A non-executive director is entitled to be paid travel and other expenses properly incurred by them in attending directors’ or general meetings of Cokal Limited or otherwise in connection with the business of the consolidated entity.

The remuneration of the sole non-executive director for the year ending 30 June 2016 is detailed in this Remuneration Report.

Executive Directors and Senior Management RemunerationThe consolidated entity aims to reward the Executive Directors and senior management with a level and mix of remuneration commensurate with their position and responsibilities within the consolidated entity so as to: reward Executives for consolidated entity and

individual performance; align the interests of executives with those of

shareholders; link reward with the strategic goals and performance

of the consolidated entity; and ensure total remuneration is competitive by market

standards.The remuneration of the Executive Directors and senior management may from time to time be fixed by the Board. As noted above, the Board’s policy is to align the Executive Directors and senior management objectives with shareholder and business objectives by providing a fixed remuneration component and offering short and/or long-term incentives as appropriate.

The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to


the position and is competitive in the market. Short-term incentives may be provided in the form of performance bonuses. Fixed remuneration and short-term incentives are reviewed annually by the Board, in carrying out the functions of the Remuneration Committee, and the process consists of a review of Company-wide and individual performance, relevant comparative remuneration in the market and internal, and where appropriate, external advice on policies and practices.

Senior management are given the opportunity to receive their fixed remuneration in a variety of forms including cash and fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the consolidated entity.

Long-term incentives may be provided in the form of options and/or the issue of shares following the completion of satisfactory time periods of service. The consolidated entity uses employee continuity of service and the future share price to align comparative shareholder return and reward for executives.

The remuneration of the Executive Directors and senior management for the year ending 30 June 2016 is detailed in this Remuneration Report.

Relationship between Remuneration and Consolidated Entity PerformanceDuring the financial year, the consolidated entity has generated losses as its principal activity was exploration for coal within the Central Kalimantan coking coal basin in Indonesia.

The following table shows the performances of the consolidated entity for the last five years:

Year-end (30 June)

2016US$

2015US$

2014AU$

2013AU$

2012AU$

Share price 0.015 0.10 0.14 0.16 0.21

Basic loss per share (6.07) (2.76) (1.40) (1.64) (1.68)

There were no dividends paid during the year ended 30 June 2016.

As the consolidated entity is still in the exploration and development stage, the link between remuneration, consolidated entity performance and shareholder wealth is tenuous. Share prices are subject to the influence of coal prices and market sentiment toward the sector, and as such increases or decreases may occur quite independent of executive performance or remuneration.

Employment and Services Agreements It is the Board’s policy that employment and/or services agreements are entered into with all Executive Directors, senior management and employees.

Agreements do not provide for pre-determining compensation values or method of payment. Rather the amount of compensation is determined by the Board in accordance with the remuneration policy set out above.

KMP are entitled to their statutory entitlements of accrued annual leave and long service leave together with any superannuation on termination. No other termination payments are payable.

Chairman and Chief Executive OfficerCokal Limited has a services agreement with Petla Trust and Peter Lynch, the Executive Chairman and CEO (Resigned 24 June 2016 and appointed as Non-Executive Chairman on 24 June 2016). The Agreement commenced on 24 December 2010. Under the terms and conditions of the agreement, Petla Trust has agreed to provide certain corporate management and other services to the consolidated entity. Additionally on the 5th of May 2013, Peter Lynch has agreed to act as the Chairman and Chief Executive Officer of Cokal Limited. The agreement with Petla Trust was amended to allow Peter Lynch to act as Chief Executive officer and the base fee for provision of the service was adjusted to AU$520,000 (USD386,000) per annum (exclusive of GST) on the basis of a minimum of 80% of Peter’s time. The consolidated entity is also obliged to reimburse Petla Trust for all reasonable and necessary expenses incurred by Petla Trust in providing services pursuant to the agreement.

Both Cokal Limited and Petla Trust are entitled to terminate the agreement upon giving not less than three month’s written notice. In the event that Petla Trust is in breach of the agreement, Cokal Limited may terminate the agreement immediately on written notice. In addition, Cokal Limited is entitled to terminate the agreement upon the happening of various events in respect of Petla Trust’s solvency or other conduct of Petla Trust or Peter Lynch.

Executive DirectorCokal Limited has a services agreement with Hanna Consulting Services Pty Ltd and Patrick Hanna, Executive Director. The Agreement commenced on 24 December 2010. Under the terms and conditions of the agreement, Hanna Consulting Services Pty Ltd has agreed to provide certain executive and geological management and other services to the consolidated entity. Additionally, Patrick Hanna has agreed to act as the Executive Director of Cokal Limited.

Hanna Consulting Services Pty Ltd will receive a base fee for provision of the services of AU$240,000 (USD178,000) per annum (exclusive of GST) for a minimum of ten days service per month. Additional fees of AU$2,000 (USD1,485) per day will be paid for additional services performed greater than ten days per month. The consolidated entity is also obliged to reimburse Hanna Consulting Services Pty Ltd for all reasonable and necessary expenses incurred by Hanna Consulting Services Pty Ltd in providing services pursuant to the agreement.

Both Cokal Limited and Hanna Consulting Services Pty Ltd are entitled to terminate the agreement upon giving not less than three month’s written notice. In the event that Hanna Consulting Services Pty Ltd is in breach of the agreement, Cokal Limited may terminate the agreement immediately on written notice. In addition, Cokal Limited is entitled to terminate the agreement upon the happening of various events in respect of Hanna Consulting Services Pty Ltd’s solvency or other conduct of Hanna Consulting Services Pty Ltd or Patrick Hanna.


Senior ManagementCFO / Joint Company Secretary Cokal Limited has an employment agreement with Victor Kuss, for the position of Chief Financial Officer commenced on 5th September 2011. He was further made Joint Company Secretary on the 14th May 2012. Mr Kuss receives an annual base salary of AU$265,000, exclusive of compulsory superannuation contributions.

Mr Kuss is eligible for an annual performance bonus of up to AU$100,000 (USD74,260), based on the discretion of the CEO, as the Group is an early stage exploration/development entity.

Mr Kuss stepped down from the position on 1 September 2015 to focus on strategic matters. The role was fulfilled by Mr Moosa Fense until 24 June 2016. Mr Fense received and annual base salary of AU$200,000 and was remunerated on the basis of hours worked.

On 24 June 2016, in line with the transfer of operations to Indonesia, Mr Teuku Juliansyah was appointed CFO and was also appointed Joint Company Secretary on 1 September 2015.

Joint Company SecretaryCokal Limited has a services agreement with Corporate Administration Services Pty Ltd (CAS) and Duncan Cornish, the Joint Company Secretary. The agreement commenced on 1 December 2011. Under the terms and conditions of the agreement, CAS has agreed to provide certain corporate secretarial, administration and other services to Cokal Limited. Additionally, Mr Cornish has agreed to act as the secretary of Cokal Limited.

CAS receives a base fee for provision of the services of AU$40,000 (exclusive of GST). If at the request of the consolidated entity, CAS or Mr Cornish provides additional services to the consolidated entity, CAS shall be paid additional remuneration at an hourly rate. The additional services means the provision of other such services as may be required by the Company to be performed from time to time and being within the scope of CAS’s expertise, including but not limited to corporate actions, capital raisings, prospectus management, extended (>3 days) Company-related corporate travel not associated with Company Secretarial or administrative duties (eg. conferences, road shows, site visits etc). The consolidated entity is also obliged to reimburse CAS for all reasonable and necessary expenses incurred by CAS in providing services pursuant to the Agreement.

Both Cokal Limited and CAS are entitled to terminate the agreement upon giving not less than one month’s written notice. In the event that a party is in breach of the agreement either party may terminate the Agreement immediately on written notice. In addition, Cokal Limited is entitled to terminate the agreement upon the happening of various events in respect of CAS’ solvency or other conduct of CAS or Mr Cornish. CAS is also entitled to terminate the agreement upon the happening of various events in respect of Cokal Limited’s solvency.

Indonesian Country Manager / COOCokal Limited has an employment agreement with Gerhardus Kielenstyn for the position of Indonesian Country Manager which commenced on 1 May 2013. Mr

Kielenstyn receives an annual base salary up to US$480,000, inclusive of benefits.

Mr Kielenstyn is eligible for an annual performance bonus on the discretion of the CEO, as the Group is an early stage entity.

The employment agreement may be terminated at any time by the Company for Cause, being serious misconduct or the happening of various events in respect of Mr Kielenstyn’s conduct.

Mr Kielynstyn was appointed to the role of Chief Operating Officer (COO) effective 24th of June 2016.

a) Details of Key Management Personnel (KMP)(i) Directors

Peter Lynch, Executive Chairman and CEO (appointed Chairman 24 December 2010, appointed CEO on 5 May 2013, resigned as CEO and Executive Chairman on 24 June 2016)

Non-Executive Chairman (appointed 24 June 2016)

Patrick Hanna, Executive Director (appointed 24 December 2010)

Domenic Martino, Non-Executive Director (appointed 24 December 2010)

Lt. Gen. (Ret.) Widjojo, Non-Executive Director (appointed 14 August 2013, resigned 10 May 2016)

(ii) Senior ManagementTeuku Juliansyah, CFO (appointed 24 June 2016) & Joint Company Secretary (appointed 1 September 2015)

Victor Kuss, CFO (appointed 5 September 2011, resigned 1 September 2015) & Manager Corporate Restructure (appointed 1 September 2015)

Moosa Fense, CFO (appointed 1 September 2015, resigned 24 June 2016)

Duncan Cornish, Company Secretary (appointed 24 December 2010)

Gerhardus Kielenstyn, Indonesia Country Manager (appointed 1 May 2013 – 23 June 2016) (appointed as COO 24th June 2016)

b) Remuneration Details The following table of benefits and payments details, in respect to the financial years ended 30 June 2016 and 2015, the component of remuneration for each key management person of the consolidated entity:


Short-Term Benefits Post-Employment

TerminationBenefits

Share-basedpayments

Salary &Fees

CashBonus

Other short-term

benefits

Superannuation Equity-settled

(options)

Cash-settled2016

US$ US$ US$ US$ US$ US$ US$

TotalUS$

%Remuneration

as options

Directors

Peter Lynch # 174,136 - - - - - - 174,136 0%

Patrick Hanna # 84,944 - - - - - - 84,944 0%

Domenic Martino 27,062 - - - - - - 27,062 0%

Agus Widjojo ● 42,191 - - - - - - 42,191 0%

Total 328,333 - - - - - 328,333

Senior Management

Duncan Cornish 37,337 - - - - - - 37,337 0%

Victor Kuss * 125,812 - 13,522 13,104 - 94,213 - 246,651 38.2%

Gerhardus Kielenstyn 444,647 - - - - 73,548 - 518,195 14.2%

Teuku Juliansyah 10,225 - - - - 645 10,870 5.9%

Moosa Fense 82,838 - - - - 82,838 0%

Total 700,859 - 13,522 13,104 - 168,406 - 895,891

# Fees based on current status of project● appointed 14 August 2013 and resigned 10 May 2016* Resigned as CFO on 1 September 2015 and appointed Manager Corporate Restructure

Short-Term Benefits Post-Employment

TerminationBenefits

Share-basedpayments

Salary &Fees

CashBonus

Other short-term

benefits

Superannuation Equity-settled

(options)

Cash-settled2015

US$ US$ US$ US$ US$ US$ US$

TotalUS$

%Remuneration

as options

Directors

Peter Lynch # 253,982 - - - - - - 253,982 0%

Patrick Hanna # 164,146 - - - - - - 164,146 0%

Domenic Martino 117,786 - - - - - - 117,786 0%

Agus Widjojo ● 54,416 - - - - - - 54,416 0%

Total 590,330 - - - - - 590,330

Senior Management

Duncan Cornish 33,672 - - - - - - 33,672 0%

Victor Kuss * 208,502 - 13,220 21,064 - 205,805 - 448,591 45.9%

Gerhardus Kielenstyn 455,530 - - - - 103,670 - 559,200 18.5%

Total 697,704 - 13,220 21,064 - 309,475 - 1,041,463

# Fees based on current status of project● appointed 14 August 2013* Resigned as CFO on 1 September 2015 an appointed Manager Corporate Restructure

Advances to KMPAdvances to KMP at 30 June 2016 have been included in other receivables. The details of these advances are:

2016US$

2015US$

Peter Lynch 2,844 2,8442,844 2,844

Advances made relate to travel advances and are made in the ordinary course of business. These advances have been repaid in full at the date of adoption of the director’s report.

Cash Bonuses, Performance-related Bonuses and Share-based Payments

KMP and other executives may be paid cash bonuses or performance-related bonuses. Options are subject to continuation of services until agreed expiry date. The Board resolved to extend the Period of expiry to six months after ceasing employment for all employee options holders that have been given notice of termination of employment between January to June 2016.


Options holdingsDetails of share-based payments to KMP and other executives awarded and vested/unvested during the year ended 30 June 2016 and 30 June 2015 are detailed in the table below:

Balance1 July 2015

Granted as Remuneration

Exercise of

Options

Net ChangeOther

Balance30 June 2016

Total vested at 30 June

2016

Total vested and

exercisable at 30 June 2016

Total vested and unexercisable at

30 June 2016

DirectorsPeter Lynch - - - - - - - -Patrick Hanna - - - - - - - -Domenic Martino - - - - - - - -Agus Widjojo ● - - - - - - - -Senior ManagementDuncan Cornish - - - - - - - -Gerhardus Kielenstyn 8,000,000 - - - 8,000,000 6,000,000 6,000,000 -Teuku Juliansyah - - - 500,000 500,000 - -Victor Kuss * 15,000,000 - - (5,000,000) 10,000,000 7,500,000 7,500,000 -

Total 23,000,000 - - (4,500,000) 18,500,000 13,500,000 13,500,000 -

Balance1 July 2014


Exercise of Options

Net ChangeOther

Balance30 June 2015


2015

Total vested and

exercisable at 30 June 2015


30 June 2015

DirectorsPeter Lynch - - - - - - - -Patrick Hanna - - - - - - - -Domenic Martino - - - - - - - -Agus Widjojo ● - - - - - - - -Senior ManagementDuncan Cornish - - - - - - - -Gerhardus Kielenstyn 4,000,000 4,000,000 - - 8,000,000 - 4,000,000 -Victor Kuss * 10,000,000 5,000,000 - - 15,000,000 2,000,000 3,000,000 -

Total 14,000,000 9,000,000 - - 23,000,000 2,000,000 7,000,000

● appointed 14 August 2013 and resigned 10 May 2016* Resigned as CFO on 1 September 2015 an appointed Manager Corporate Restructure

These options were not issued based on performance criteria as the Board does not consider this appropriate for a junior exploration Group. The options were issued to the director and senior management of Cokal Limited to align comparative shareholder return and reward for director and senior management.

All options were issued by Cokal Limited and entitle the holder to one ordinary share in Cokal Limited for each option exercised.

Remun-eration

typeGrant date Vesting

date NumberExercise

Price

US$

Grant value

(per option)

US$

Percentage vested /

paid during year

%

Percentage forfeited/ cancelled

during year

%

Percentage remaining

as unvested

%

Expiry date

Consolidated entity KMP

Victor Kuss Options 11/07/2013 11/07/2015 5,000,000 0.23 0.09 100% - - 11/07/2017

Victor Kuss Options 24/02/2015 24/02/2016 2,500,000 0.10 0.03 100% - - 24/02/2019

Victor Kuss Options 24/02/2015 24/02/2017 2,500,000 0.10 0.03 - - 100% 24/02/2019

Gerhardus Kielenstyn Options 11/07/2013 11/07/2014 2,000,000 0.20 0.09 - - - 11/07/2017

Gerhardus Kielenstyn Options 11/07/2013 11/07/2015 2,000,000 0.20 0.09 100% - - 11/07/2017

Gerhardus Kielenstyn Options 24/02/2015 24/02/2016 2,000,000 0.10 0.03 100% - - 24/02/2019

Gerhardus Kielenstyn Options 24/02/2015 24/02/2017 2,000,000 0.10 0.03 - - 100% 24/02/2019

Teuku Juliansyah Options 24/02/2015 24/02/2017 500,000 0.10 0.03 - - 100% 24/02/2019


All options granted as part of remuneration for the year ended 30 June 2016 were granted for nil consideration. Once vested, options can be exercised at any time up to the expiry date.

The consolidated entity does not currently have a policy prohibiting directors and executives from entering into arrangements to protect the value of unvested options. No directors or executives have entered into contracts to hedge their exposure to options awarded as part of their remuneration package.

ShareholdingsDetails of ordinary shares held directly, indirectly or beneficially by KMP and their related parties are as follows:

Balance1 July 2015


On Exercise of Options

Net ChangeOther

Balance30 June 2016

DirectorsPeter Lynch 56,052,000 - - (30,131,200) 25,920,800Patrick Hanna 25,800,000 - - - 25,800,000Domenic Martino 31,520,001 - - - 31,520,001Agus Widjojo - - - - -Senior ManagementDuncan Cornish 2,401,215 - - - 2,401,215Garry Kielenstyn 32,000 - - - 32,000Teuku Juliansyah - - - - -Victor Kuss * 675,000 - - 225,00 900,000

Total 116,480,216 - - (29,906,200) 86,574,016Balance

1 July 2014Granted as

RemunerationOn Exercise of Options

Net ChangeOther

Balance30 June 2015

DirectorsPeter Lynch 56,052,000 - - - 56,052,000Patrick Hanna 25,800,000 - - - 25,800,000Domenic Martino 31,520,001 - - - 31,520,001Agus Widjojo - - - - -Senior ManagementDuncan Cornish 2,401,215 - - - 2,401,215Garry Kielenstyn 32,000 - - - 32,000Victor Kuss * 675,000 - - - 675,000

Total 116,480,216 - - - 116,480,216

* Resigned as CFO on 1 September 2015 and appointed Manager Corporate Restructure

Transactions with KMP and their related entities During the financial year ended 30 June 2016, Hanna Consulting Services Pty Ltd (of which Pat Hanna is a director)

provided to the Group geological consulting services for various exploration projects, Indonesia, including site management, geological staff recruitment, preparation of field base camp and geological mapping surveys. Hanna Consulting Services Pty Ltd received US$84,944 (2015: US$164,146) for these services during the financial year. The services were based on normal commercial terms and conditions.

During the financial year ended 30 June 2016, Petla Trust (of which Peter Lynch is a director) provided to the Group consulting services. Petla Trust received US$174,136 (2015: US$253,982) for these services during the financial year. The services were based on normal commercial terms and conditions.

During the year ended 30 June 2016, the Group paid consulting fees of US$nil (2015: US$44,476) to PT. Pandu Wira Sejahtera of which Harun Abidin is a director. Harun is also a director of PT. Anugerah Alam Manuhing, PT. Anugerah Alam Katingan and PT. Silangkop Nusa Raya. These companies are part of the Cokal group.


Directors’ MeetingsThe number of meetings of Directors (including meetings of committees of directors) held during the year and the number of meetings attended by each Director was as follows:

Board Audit Committee

Number of meetings

held while in office

Meetings attended

Number of meetings

held while in office

Meetings attended

Peter Lynch 12 12 2 2

Pat Hanna 12 12 2 2

Domenic Martino 12 12 2 2

Agus Widjojo 12 7 n/a n/a

Indemnification and Insurance of Directors, Officers and AuditorEach of the current Directors and Secretaries of Cokal Limited have entered into a Deed with Cokal Limited whereby Cokal Limited has provided certain contractual rights of access to books and records of Cokal Limited to those Directors and Secretaries.

Cokal Limited has insured all of the Directors of the consolidated entity. The contract of insurance prohibits the disclosure of the nature of the liabilities covered and amount of the premium paid. The Corporations Act does not require disclosure of the information in these circumstances.

To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year.

OptionsAt 30 June 2016, there were 60,150,000 unissued ordinary shares under options as follows:

350,000 unlisted options exercisable at US$0.77 on or before 12 October 2016

4,000,000 unlisted options exercisable at US$0.20 on or before 11 July 2017

5,800,000 unlisted options exercisable at US$0.23 on or before 11 July 2017

15,000,000 unlisted options exercisable at US$0.19 on or before 27 August 2018

25,000,000 unlisted options exercisable at US$0.10 on or before 6 February 2019

10,000,000 unlisted options exercisable at US$0.10 on or before 24 February 2019

No option holder has any right under the options to participate in any other share issue of Cokal Limited or any other entity.

During the year ended 30 June 2016, no ordinary shares in Cokal Limited were issued as a result of the exercise of options.

Subsequent to year end, no ordinary shares in Cokal Limited were issued as a result of the exercise of options.

Proceedings on Behalf of the Consolidated EntityNo person has applied for leave of Court to bring proceedings on behalf of the consolidated entity or intervene in any proceedings to which the consolidated entity is a party for the purposes of taking responsibility on behalf of the consolidated entity for all or any part of those proceedings.

The consolidated entity was not a party to any such proceedings during the year.

Auditor’s Independence DeclarationThe Auditor’s Independence Declaration forms part of the Directors’ Report and can be found on page 23.

Corporate GovernanceIn recognising the need for the highest standards of corporate behaviour and accountability, the directors of Cokal Limited support and have adhered to the principles of corporate governance. Cokal Limited’s Corporate Governance Statement has been made publicly available on the Company’s website at: www.cokal.com.au.

This report is signed in accordance with a resolution of the directors.

Cokal Limited

Peter LynchChairman and Chief Executive Officer

Brisbane27 September 2016

A member firm of Ernst & Young Global LimitedLiability limited by a scheme approved under Professional Standards Legislation

Ernst & Young111 Eagle StreetBrisbane QLD 4000 AustraliaGPO Box 7878 Brisbane QLD 4001

Tel: +61 7 3011 3333Fax: +61 7 3011 3100ey.com/au

Auditor’s Independence Declaration to the Directors of Cokal Limited

As lead auditor for the audit of Cokal Limited for the financial year ended 30 June 2016, I declare tothe best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 inrelation to the audit; and

b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Cokal Limited and the entities it controlled during the financial year.

Ernst & Young

Andrew CarrickPartner27 September 2016


Shareholder InformationAdditional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 22 September 2016

(a) Distribution of Ordinary Shares and OptionsThe number of holders, by size of holding, in each class of security is:

Ordinary shares

Number of

holdersNumber of shares

1 – 1,000 313 269,976

1,001 – 5,000 139

426,411

5,001 – 10,000 241

2,217,511

10,001 – 100,000 529 21,706,319

100,001 and over 269 568,472,487

Total 1,491 593,092,704

Unlisted options

($0.77 @ 12/10/16)

Unlisted options

($0.20 @ 11/07/17)

Unlisted options

($0.23 @ 11/07/17)

Unlisted options

($0.10 @ 24/02/2019)

Number of holders

Number of options

Number of holders

Number of options

Number of holders

Number of options

Number of holders

Number of options

1 – 1,000 - - - - - - - -

1,001 – 5,000 - - - - - - - -

5,001 – 10,000 - - - - - - - -

10,001 – 100,000 - - - - - - - -

100,001 and over 2 350,000 1 4,000,000 3 5,800,000 5 10,000,000

Total 2 350,000 1 4,000,000 3 5,800,000 5 10,000,000

Unlisted options

($0.19 @ 27/08/2018)

Unlisted options

($0.10 @ 06/02/2019)

Number of holders

Number of options

Number of holders

Number of options

1 – 1,000 - - - -

1,001 – 5,000 - - - -

5,001 – 10,000 - - - -

10,001 – 100,000 - - - -

100,001 and over 1 15,000,000 1 25,000,000

Total 1 15,000,000 1 25,000,000


Twenty Largest HoldersThe names of the twenty largest holders, in each class of quoted security (ordinary shares) are:

Number of shares % of total shares

1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 121,895,319 20.55%

2 HOLDEX NOMINEES PTY LTD <NO 431 A/C> 60,057,034 10.13%

3 ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD <CUSTODIAN A/C> 42,939,694 7.24%

4 PATRICK JOSEPH HANNA 25,000,000 4.22%

5 BT PORTFOLIO SERVICES LIMITED <WARRELL HOLDINGS S/F A/C> 19,250,000 3.25%

6 MRS LAURA LYNCH 17,500,000 2.95%

7 GEBRUN PTY LTD <PETLA A/C> 17,500,000 2.95%

8 NARRAWALLEE PROPERTIES PTY LTD <THE NARRAWALLEE UNIT A/C> 15,625,000 2.63%

9 LAGUNA BAY CAPITAL PTY LTD <LAGUNA BAY CAP TRADING A/C> 15,000,000 2.53%

10 INKESE PTY LTD 13,333,333 2.25%

11 XIN HUA PTY LTD <JING JING SUPER FUND A/C> 12,631,200 2.13%

12 TJ SMOCK & CO PTY LTD <MIDDLETON FAMILY A/C> 10,000,000 1.69%

13MR PETER ANTHONY LYNCH + MRS LAURA ANNE LYNCH <SEBAL SUPER FUND A/C> 8,420,800 1.42%

14 CITICORP NOMINEES PTY LIMITED 7,897,397 1.33%

15 MONAL PTY LIMITED <ALAN CARDY SUPER FUND A/C> 7,000,000 1.18%16 MR MICHAEL CHRISTOPHER HORVATH 6,616,500 1.12%

17 BRISPOT NOMINEES PTY LTD <HOUSE HEAD NOMINEE NO 1 A/C> 6,301,613 1.06%

18 SPINITE PTY LTD 6,154,676 1.04%

19 BB CAPITAL PTY LTD 5,000,000 0.84%

20 BNP PARIBAS NOMINEES PTY LTD <LDN UK BCH DRP A/C> 4,364,104 0.74%

Top 20 422,486,670 71.23%

Total 593,092,704 100%

Substantial shareholders

Substantial shareholders as shown in substantial shareholder notices received by Cokal are:

Name of Shareholder: Ordinary Shares:Platinum Partners Value Arbitrage Fund LP &Platinum Partners Liquid Opportunity

88,109,786

Blumont Group Ltd 60,057,034

Domenic Vincent Martino & Sandra Gae Martino 37,120,001

The Company notes that, as at 2 September 2015, the following shareholders own substantial shareholdings (>= 5.0%) in Cokal:

Name of Shareholder: Ordinary Shares: % of total shares:

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 121,895,319 20.55%

HOLDEX NOMINEES PTY LTD <NO 431 A/C> 60,057,034 10.13%ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD <CUSTODIAN A/C> 42,939,694 7.24%


(b) Voting rightsAll ordinary shares carry one vote per share without restriction.

Options do not carry voting rights.

(c) Restricted securitiesThe Group currently has no restricted securities on issue.

(d) On-market buy-backThere is not a current on-market buy-back in place.

(e) Business Objectives The consolidated entity has used its cash and assets that are readily convertible to cash in a way consistent with its business objectives.


Interests in Tenements and ProjectsCokal Limited had the following interests in projects as at 30 June 2016:

IndonesiaProject Location % Interest

PT Anugerah Alam Katingan (AAK) Kalimantan 75%

PT Bumi Barito Mineral (BBM) Kalimantan 60%

PT Borneo Bara Prima (BBP) Kalimantan 60%

PT Silangkop Nusa Raya (SNR)* Kalimantan 75.2%

PT Tambang Benua Alam Raya# (TBAR) Kalimantan 75%

#in process of transferring the shares to the Group.*Sale agreement executed for disposal.

TanzaniaProject Location % Interest

Joint Venture with Tanzoz (JV1 or Manda) over tenement number PL 6281 Tanzania 50%

Joint Venture with Tanzoz (JV2) over tenement number PL 5395 plus additional tenements identified by the parties

Tanzania 60%


Consolidated Statement of Comprehensive Income for the year ended 30 June 2016

2016

2015

US$ US$

Revenue and other income 2 425,923 69,300

Employee benefits expenses (1,057,027) (1,718,508)

Depreciation expenses 12 (130,923) (200,940)

Finance costs (382,116) (2,863,531)

Legal expenses (138,988) (415,353)

Administration and consulting expenses (1,388,056) (1,983,786)

Exploration expenditure de-recognised 13 (25,655,222) (5,250,000)

Loss on sale of exploration tenement 13 (1,728,233) -

Other expenses (275,075) (681,229)

Loss before income tax expense (30,329,717) (13,044,047)

Income tax expense 5 - -

Net loss for the period (30,329,717) (13,044,047)

Other comprehensive income Items may be reclassified to profit or loss in subsequent periods (net of tax):

Exchange translation differences 95,129 -

Total comprehensive loss for the period (30,234,588) (13,044,047)

Loss per share for the loss attributable to owners of Cokal Limited: Cents Cents

Loss per share (cents per share) 7 (6.07) (2.76)

Diluted loss per share (cents per share) 7 (6.07) (2.76)

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.


Consolidated Statement of Financial Position as at 30 June 2016

2016 2015

US$ US$

Current Assets

Cash and cash equivalents 8 462,770 1,753,213

Short term deposits 8 167,655 1,538,595

Accounts receivable 9 129,230 138,402

Other current assets 14 - 232,742

Total Current Assets 759,655 3,662,952

Non-Current Assets

Property, plant and equipment 12 1,502,019 1,628,081

Exploration and evaluation assets 13 32,740,312 59,424,333

Other non-current assets 14 186,150 191,312

Total Non-Current Assets 34,428,481 61,243,726

TOTAL ASSETS 35,188,136 64,906,678

Current Liabilities

Accounts payable and others 15 1,157,841 939,821

Interest bearing loans 16 13,892,302 10,065,000

Total Current Liabilities 15,050,143 11,004,821

Non-Current Liabilities

Deferred liability 15 14,482 72,409

Interest bearing loans 16 - 3,656,836

Total Non-Current Liabilities 14,482 3,729,245

TOTAL LIABILITIES 15,064,625 14,734,066

NET ASSETS 20,123,511 50,172,612

Equity

Issued capital 17 83,622,140 83,622,140

Reserves 18 4,851,794 4,571,178

Accumulated losses 19 (68,350,423) (38,020,706)

TOTAL EQUITY 20,123,511 50,172,612

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.


Consolidated Statement of Changes in Equity for the year ended 30 June 2016

Issued

capital ReservesAccumulated

losses Total

US$ US$ US$ US$

At 1 July 2015 83,622,140 4,571,178 (38,020,706) 50,172,612

Total comprehensive loss for the year

Loss for the year - - (30,329,717) (30,329,717)

Other comprehensive income - 95,129 - 95,129

- 95,129 (30,329,717) (30,234,588)

Transactions with owners in their capacity as owners

Issue of share capital - - - -

Costs associated with issue of share capital - - - -

Share based payments - 185,487 - 185,487

- 185,487 - 185,487

At 30 June 2016 83,622,140 4,851,794 (68,350,423) 20,123,511

At 1 July 2014 81,710,873 3,062,378 (24,976,659) 59,796,592

Total comprehensive loss for the year

Loss for the year - - (13,044,047) (13,044,047)

- - (13,044,047) (13,044,047)

Transactions with owners in their capacity as owners

Issue of share capital 2,027,373 - - 2,027,373

Costs associated with issue of share capital (116,106) - - (116,106)

Share based payments - 1,508,800 - 1,508,800

1,911,267 1,508,800 - 3,420,067

-

At 30 June 2015 83,622,140 4,571,178 (38,020,706) 50,172,612

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.


Consolidated Statement of Cash Flowsfor the year ended 30 June 2016

2016 2015

US$ US$

Cash Flows from Operating Activities

Payments to suppliers and employees (2,457,877) (3,795,296)

Interest and other income received 425,923 69,300

Finance costs paid - (1,815,000)

Net cash outflow from operating activities 24 (2,031,954) (5,540,996)

Cash Flows from Investing Activities

Payments for plant and equipment (5,000) (935,628)

Decrease/(increase) in deposits maturing after three months and restricted deposits

1,370,940 (42,793)

Payments for exploration and evaluation assets (759,171) (3,154,690)

Proceeds from sale of tenements 150,000 -

Security deposit receipts / (payments) 10,028 27,230

Net cash outflow from investing activities 766,797 (4,105,881)

Cash Flows from Financing Activities

Proceeds from issue of shares and options - 2,027,373

Transaction costs on share issue - (116,106)

Proceeds from borrowings - 6,965,000

Net cash inflow from financing activities - 8,876,267

Net (decrease)/increase in cash and cash equivalents (1,265,157) (770,610)

Cash and cash equivalents at beginning of period 1,753,213 2,593,011

Net foreign exchange differences (25,286) (69,188)

Cash and cash equivalents at end of period 462,770 1,753,213

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.


Notes to the Consolidated Financial Statements

for the year ended 30 June 2016

Note 1: Summary of Significant Accounting Policies

(a) General information

The consolidated financial statements of Cokal Limited for the year ended 30 June 2016 were authorised for issue in

accordance with a resolution of the Directors dated 27 September 2016 and covers the consolidated entity (the “Group” or

“Cokal”) consisting of Cokal Limited (the “Company”) and its subsidiaries.

The financial statements are presented in United States Dollars (“USD” or “US$”).

Cokal Limited (the parent) is a company limited by shares, incorporated and domiciled in Australia, whose shares are publicly

traded on the Australian Securities Exchange.

The principal activities of the Group during the year were focused on the identification and development of coal within the

highly prospective Central Kalimantan coking coal basin in Indonesia.

(b) Basis of preparation

The financial statements are general purpose financial statements which have been prepared in accordance with Australian

Accounting Standards and the Corporations Act 2001.

The financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International

Accounting Standards Board (IASB).

The financial statements have been prepared on a historical cost basis.

(c) Going concern

At 30 June 2016, the current liabilities exceed the current assets by US$14,290,488 (30 June 2015: US$ 7,341,869). The

financial report has been prepared on a going concern basis which contemplates the continuity of normal business activities

and the realisation of assets and discharge of liabilities in the ordinary course of business. The ability of the Group to

continue to adopt the going concern assumption will depend upon a number of matters including:

a) Financing arrangement for the evaluation and development activities of BBM project;

b) The successful raising in the future of necessary funding, through debt, equity or farm-out to complete the BBM

project to operational status;

c) Management of short term interest bearing liabilities through BBM project financing, additional debt or equity

raising or modified repayment terms with lenders; and

d) The successful exploration and subsequent exploitation of the Group’s tenements.

Should these avenues be delayed or fail to materialize, the Group has the ability to scale back its activities to help the Group

to manage to meet its debts as and when they fall due in the short term, however this would require the Group to

renegotiate or satisfy current borrowings of US$13.9 million, through loan extensions (which require lender consent) and

funding from other sources and other arrangements.

Subsequent to year end, on 22 July 2016, Cokal reached an agreement with Platinum Partners Value Arbitrage Fund, LP

(Platinum) to convert approximately US$15 million of loans (including future interest) owing by Cokal to various funds

managed by Platinum or its affiliates (the Platinum Group). Those loans include the Blumont loan, which was acquired by the

Platinum Group. Given that formal agreements and documents are yet to be finalised, there has been no adjustment made

to the loans at 30 June 2016.

The Directors are confident given the current permitting and financing processes undertaken and announced to the market

that the Group will be successful in its endeavours.

The financial report does not include any adjustments relating to the recoverability and classification of recorded asset

amounts or to the amounts and classification of liabilities should the Group be unsuccessful in raising funds or managing its

existing funds to enable it to realise its assets and discharge its liabilities in the ordinary course of business.

Specifically, the Group has assessed that AASB 6 Exploration for and Evaluation of Mineral Resources (AASB 6) impairment

indicators exist at 30 June 2016. In such circumstances and given prevailing coal market conditions, the Group may not be able to

recover the full carrying amount of its tenements through sale of its assets. The Group has tested for impairment under AASB 136

Impairment of Assets. As a result the group has recognised impairment to tenements and this is disclosed in Note 13.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016(d) New accounting standards and interpretations

(i) Changes in accounting policy and disclosures

The Group applied for the first time certain standards and amendments, which are effective for annual periods beginning on or after 1 July 2015. The group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

(ii) Accounting Standards and Interpretations issued but not yet effective

A number of Australian Accounting Standards and Interpretations have recently been issued but are not yet effective. The directors have not early adopted any of these new or amended Standards and Interpretations for the year ended 30 June 2016. The directors have not yet fully assessed the impact of these new or amended Standards or Interpretations (to the extent relevant to the Group). The new standards and interpretations that could potentially impact the Group include the following:

- AASB 9: Financial Instruments (effective annual reporting periods commencing on or after 1 January 2018);- AASB 15: Revenue from Contracts with Customers (effective annual reporting periods commencing on or after 1

January 2018; and- Amendments to AASB 11 Joint Arrangements: Accounting for Acquisitions of Interests (effective annual reporting

periods commencing on or after 1 January 2016);- AASB 16: Leases (effective annual reporting periods commencing on or after 1 January 2019).

(e) Basis of consolidationThe consolidated financial statements comprise the financial statements of the Company and its subsidiaries at reporting date. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

Exposure, or rights, to variable returns from its involvement with the investee; and The ability to use its power over the investee to affect its returns.

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

The contractual arrangements with the other vote holders of the investee; Rights arising from other contractual arrangements; and The Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-Group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016(e) Basis of consolidation (cont’d)

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: De-recognises the assets (including goodwill) and liabilities of the subsidiary; De-recognises the carrying amount of any non-controlling interests; De-recognises the cumulative translation differences recorded in equity; Recognises the fair value of the consideration received; Recognises the fair value of any investment retained; Recognises any surplus or deficit in profit or loss; and Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as

appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.

(f) Business combinations Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of AASB 139 Financial Instruments: Recognition and Measurement, is measured at fair value with changes in fair value recognised either in either profit or loss or as a change to OCI. If the contingent consideration is not within the scope of AASB 139, it is measured in accordance with the appropriate standards. Contingent consideration that is classified as equity is not re-measured and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016 (g) Revenue recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being received. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Group has concluded that it is acting as a principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements, has pricing latitude and is also exposed to inventory and credit risks. The specific recognition criteria described below must also be met before revenue is recognised:

InterestFor all financial instruments measured at amortised cost and interest bearing financial assets classified as loans and receivables, interest income is recorded using the effective interest rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter year, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in other income.

Sale of goods Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods.

Consultation feesConsultation fees are recognised when the service is rendered and revenue can be measured reliably.

(h) Income taxThe income tax expense for the year is the tax payable on the current year's taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax base of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected to apply when the assets are recovered or liabilities settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. Exceptions are made for certain temporary differences arising on initial recognition of an asset or a liability if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit.

Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries, associates and interests in joint ventures where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Current and deferred tax balances relating to amounts recognised directly in other comprehensive income and equity are also recognised directly in other comprehensive income and equity, respectively.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer profitable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

Cokal Limited and its wholly-owned subsidiaries are in the process of implementing the tax consolidation legislation in Australia. Cokal Limited will be the head entity in the tax consolidated Group. Once the tax consolidation is executed, these entities will be taxed as a single entity and deferred tax assets and liabilities will be offset in these consolidated financial statements.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016(i) Impairment of non-financial assets other than goodwillAt the end of each reporting period the Group assesses whether there is any indication that individual assets other than goodwill, are impaired. Where impairment indicators exist, recoverable amount is determined and impairment losses are recognised in profit or loss where the asset's carrying value exceeds its recoverable amount. Recoverable amount is the higher of an asset's FVLCD and VIU. For the purpose of assessing VIU, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Where it is not possible to estimate the recoverable amount for an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Assets other than goodwill that have previously been impaired are tested for possible reversal of the impairment whenever events or changes in circumstances indicate that the impairment may have reversed.

(j) Joint venture and joint operationsA joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

The considerations made in determining joint control are similar to those necessary to determine control over subsidiaries. A joint arrangement can be classified as a joint venture or a joint operation. The classification of a joint arrangement as a joint venture or a joint operation depends upon the rights and obligations of the parties to the arrangement.

(j) Joint venture and joint operations (cont’d)A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement.

Joint ventures are accounted for using the equity method. The Group does not currently have any joint ventures.

The Group recognises its interest in joint operations as follow: Assets, including its share of any assets held jointly; Liabilities, including its share of any liabilities incurred jointly; Revenue from the sale of its share of the output arising from the joint operation; Share of the revenue from the sale of the output by the joint operation; and Expenses, including its share of any expenses incurred jointly.

Details of the Group’s joint arrangements are set out in Note 11.

(k) Cash and cash equivalentsFor the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and at bank, deposits held at call with financial institutions, other short term, highly liquid investments with maturities of three months or less, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(l) Financial instruments – initial recognition and subsequent measurementA financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

(i) Financial assets

Initial recognition and measurement Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group currently only has receivables.

All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e. the date that the Group commits to purchase or sell the asset.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016(i) Financial assets (cont’d)

Subsequent measurement

Loans and receivables This category is the most relevant to the Group and generally applies to trade and other receivables. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in profit or loss in the statement of comprehensive income. The losses arising from impairment are recognised in profit or loss in the statement of comprehensive income in finance costs for loans and in cost of sales or other operating expenses for receivables.

De-recognition A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily de-recognised (i.e. removed from the Group’s consolidated statement of financial position) when:

The rights to receive cash flows from the asset have expired; or The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the

received cash flows in full without material delay to a third party under a ”pass-through” arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Group’s continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Impairment of financial assets The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a Group of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

(ii) Financial liabilities

Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, loans and borrowings.

Subsequent measurement The measurement of financial liabilities depends on their classification, as described below:

Accounts payableAccounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers and employees. The accounts payable are subsequently measured at amortised cost using the effective interest method (EIR). Due to their short term nature, the fair value approximates their carrying value.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016(ii) Financial liabilities (cont’d)

Loans and borrowings This is the category most relevant to the Group. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are de-recognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in profit or loss in the statement of comprehensive income. This category generally applies to interest bearing loans and borrowings.

De-recognition A financial liability is de-recognised when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss in the statement of comprehensive income.

Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

(m) Property, plant and equipmentProperty, plant and equipment are measured at cost less depreciation and impairment losses.

The cost of property, plant and equipment constructed within the Group includes the cost of materials, direct labour, borrowing costs and an appropriate portion of fixed and variable costs.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the consolidated entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the period in which they are incurred.

DepreciationThe depreciable amount of property, plant and equipment is depreciated over their useful life to the Group commencing from the time the asset is held ready for use.

The depreciation rates used for each class of assets are:

Class of Fixed Assets Depreciation RateLand nilComputer Equipment 33.3% straight lineFurniture and Office Equipment 10 – 33.3% straight lineMotor Vehicles 20% straight line

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An item of property, plant and equipment is de-recognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Gains and losses on disposal are determined by comparing proceeds with the carrying amount. The gains and losses are included in the statement of comprehensive income.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016(n) Exploration, evaluation and development expenditureExploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. Such expenditures comprise net direct costs and an appropriate portion of related overhead expenditure but do not include overheads or administration expenditure not having a specific nexus with a particular area of interest. The exploration and evaluation expenditure is only carried forward as exploration or evaluation assets to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves and active or significant operations in relation to the area are continuing.

When technical feasibility and commercial viability of extracting a Coal Resource have been demonstrated then any capitalised exploration and evaluation expenditure is reclassified as capitalised mine development. Prior to reclassification, capitalised exploration and evaluation expense is assessed for impairment.

A regular review has been undertaken on each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Accumulated costs in relation to an abandoned area are written off/de-recognised in full against profit in the period in which the decision to abandon the area is made.

Costs related to the acquisition of properties that contain Coal Resources are allocated separately to specific areas of interest. These costs are capitalised until the viability of the area of interest is determined.

The stripping costs (the process of over burden removal) incurred before production commences (development stripping) are capitalised as part of mine development expenditure and subsequently amortised.

The stripping costs incurred subsequent to commencement of production are referred to as production stripping. Production stripping is generally considered to create two benefits, being either the production of inventory or improved access to the coal to be mined in the future. Where the benefits are realised in the form of inventory produced in the period, the production stripping costs are accounted for as part of the cost of producing those inventories. Where the benefits are realised in the form of improved access to ore to be mined in the future, the costs are recognised as a non-current asset, referred to as a ‘stripping activity asset’, if the following criteria are met:a) Future economic benefits (being improved access to the ore body) are probable;b) The component of the ore body for which access will be improved can be accurately identified; andc) The costs associated with the improved access can be reliably measured.

If all of the criteria are not met, the production stripping costs are charged to profit or loss as operating costs as they are incurred. When production commences, the accumulated costs for the relevant area of interest (mine development and acquired properties) will be amortised over the life of the area according to the rate of depletion of the economically recoverable reserves using a units of production method.

Mine rehabilitation costs will be incurred by the Group either while operating, or at the end of the operating life of, the Group’s facilities and mine properties. The Group assesses its mine rehabilitation provision at each reporting date. The Group recognises a rehabilitation provision where it has a legal and constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of obligation can be made. The nature of these restoration activities includes: dismantling and removing structures; rehabilitating mines and tailings dams; dismantling operating facilities; closing plant and waste sites; and restoring, reclaiming and revegetating affected areas.

The obligation generally arises when the asset is installed or the ground/environment is disturbed at the mining operation’s location. When the liability is initially recognised, the present value of the estimated costs is capitalised by increasing the carrying amount of the related mining assets to the extent that it was incurred as a result of the development/construction of the mine. Any rehabilitation obligations that arise through the production of inventory are recognised as part of the related inventory item. Additional disturbances which arise due to further development /construction at the mine are recognised as additions or charges to the corresponding assets and rehabilitation liability when they occur. Costs related to restoration of site damage (subsequent to start of commercial production) that is created on an ongoing basis during production are provided for at their net present values and recognised in profit or loss as extraction progresses.

Changes in the estimated timing of rehabilitation or changes to the estimated future costs are dealt with prospectively by recognising an adjustment to the rehabilitation liability and a corresponding adjustment to the asset to which it relates, if the initial estimate was originally recognised as part of an asset measured in accordance with AASB 116.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016(n) Exploration, evaluation and development expenditure (cont’d)Any reduction in the rehabilitation liability and, therefore, any deduction from the asset to which it relates, may not exceed the carrying amount of that asset. If it does, any excess over the carrying value is taken immediately to the statement of profit or loss and other comprehensive income.

If the change in estimate results in an increase in the rehabilitation liability and, therefore, an addition to the carrying value of the asset, the Group considers whether this is an indication of impairment of the asset as a whole, and if so, tests for impairment. If, for mature mines, the estimate for the revised mine assets net of rehabilitation provisions exceeds the recoverable value, then that portion of the increase is charged directly to expense.

Over time, the discounted liability is increased for the change in present value based on the discount rates that reflect current market assessments and the risks specific to the liability. The periodic unwinding of the discount is recognised in the statement of profit or loss and other comprehensive income as part of finance costs. For closed sites, changes to estimated costs are recognised immediately in the statement of profit or loss and other comprehensive income.

The Group recognises neither the deferred tax asset in respect of the temporary difference on the decommissioning liability nor the corresponding deferred tax liability in respect of the temporary difference on a decommissioning asset.

(o) Employee benefits Wages and salaries, annual leave and sick leaveLiabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the end of the reporting period are recognised in respect of employees' services rendered up to the end of the reporting period and are measured at amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when leave is taken and measured at the actual rates paid or payable. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements.

(p) ProvisionsProvisions for legal claims and make good obligations are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that that an outflow of economic resources will be required to settle the obligation and the amount can be reliably estimated.

(q) Issued capitalOrdinary shares are classified as equity. Costs directly attributable to the issue of new shares or options are shown as a deduction from the equity proceeds, net of any income tax benefit.

(r) Share-based paymentsThe Group provides benefits to employees (including directors) and suppliers (including financiers and consultants) in the form of share-based payment transactions, whereby employees or suppliers render/provide services in exchange for shares or options over shares (equity-settled transactions).

The fair value of options granted to employees is recognised as an employee benefit expense with a corresponding increase in equity (share-based payment option reserve). The fair value of options granted to financiers is recognised as finance cost with a corresponding increase in equity (share-based payment option reserve). Fair value of shares issued to employees and consultants are recognised as employee benefits and consultancy expenses respectively with a corresponding increase in share capital. The fair value is measured at grant date and recognised over the period during which the employees/suppliers become unconditionally entitled to the options. Fair value is determined by an independent valuer using a Black-Scholes option pricing model. In determining fair value, no account is taken of any performance conditions other than those related to the share price of Cokal Limited (market conditions).

The cumulative expense recognised between grant date and vesting date is adjusted to reflect the directors’ best estimate of the number of options that will ultimately vest because of internal conditions of the options, such as the employees having to remain with the Group until vesting date, or such that employees are required to meet internal performance targets. There are no conditions associated with the options issued to the financiers. No expense is recognised for options that do not ultimately vest because internal conditions were not met. An expense is still recognised for options that do not ultimately vest because a market condition was not met.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016(r) Share-based payments (cont’d)

At each subsequent reporting date until vesting the cumulative charge to the statement of comprehensive income is the product of: - The grant date fair value of the award;- The current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of employees turnover during the vesting period and the likelihood of non-market performance conditions being met; and - The expired portion of the vesting period.The charge to the statement of comprehensive income for the period is the cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding entry to equity.

Where the terms of options are modified, the expense continues to be recognised from grant date to vesting date as if the terms had never been changed. In addition, at the date of the modification, a further expense is recognised for any increase in fair value of the transaction as a result of the change.

Where options are cancelled, they are treated as if vesting occurred on cancellation and any unrecognised expenses are taken immediately to profit or loss. However, if new options are substituted for the cancelled options and designated as a replacement on grant date, the combined impact of the cancellation and replacement options are treated as if they were a modification.

The dilution effect, if any, of outstanding options is reflected as additional share dilutions in the computation of diluted earnings per share.

(s) Earnings per shareBasic earnings per shareBasic earnings per share is calculated by dividing the profit/(loss) attributable to owners of Cokal Limited by the weighted average number of ordinary shares outstanding during the period, adjusted for bonus elements in ordinary shares during the period.

Diluted earnings per shareEarnings used to calculate diluted earnings per share are calculated by adjusting the amount used in determining basic earnings per share by the after-tax effect of dividends and interest associated with dilutive potential ordinary shares. The weighted average number of shares used is adjusted for the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(t) GSTRevenues, expenses and assets are recognised net of GST except where GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statements of financial position.

Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(u) Determination and presentation of operating segmentsAASB 8 Operating segments requires a management approach under which segment information is presented on the same basis as that used for internal reporting purposes. Operating segments are reported in a manner that is consistent with the internal reporting to the chief operating decision maker (CODM), which has been identified as the Board of Directors.

Operating segments that meet the qualification criteria as prescribed by AASB 8 are reported separately. However, an operating segment that does not meet the qualification criteria is still reported separately when information about the segment would be useful to users of the financial statements.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016 (v) Fair value measurementThe Group did not have any financial assets and liabilities measured at fair value at reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

In the principal market for the asset or liability; or In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is

directly or indirectly observable Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is

unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

(w) Foreign currency translationTransactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of transaction (refer note 1(d)). Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. The resulted gain or loss on retranslation is included in profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

(x) Operating leasesOperating lease payments are recognised as an operating expense in the statement of comprehensive income on a straight line basis over the lease term. Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental expense and reduction of the liability.

(y) Parent entity financial informationThe financial information for the parent entity, Cokal Limited, included in Note 20, has been prepared on the same basis as the consolidated financial statements, except investments in subsidiaries and joint venture operations are accounted for at cost, less provision for impairment.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016 (z) Current versus non-current classificationThe Group presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is either:

Expected to be realised or intended to be sold or consumed in the normal operating cycle; Held primarily for the purpose of trading; Expected to be realised within 12 months after the reporting period; or Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after

the reporting period.All other assets are classified as non-current.

A liability is current when either: It is expected to be settled in the normal operating cycle; It is held primarily for the purpose of trading; It is due to be settled within 12 months after the reporting period; or There is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.

The Group classifies all other liabilities as non-current.Deferred tax assets and liabilities are classified as non-current assets and liabilities.

(aa) Critical accounting estimates and judgmentsDetails of critical accounting estimates and judgements about the future made by management at the end of the reporting period are set out below:

(i) Impairment of non-financial assetsThe Group assesses each reporting period to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimates of the recoverable amount is made, which is considered to be the higher of the fair value less costs of disposal (FVLCD) and value in use (VIU). The assessments require the use of estimates and assumptions such as long term coal prices (considering current and historical prices, price trends and related factors), discount rates, operating costs, future capital requirements and decommissioning operating performance (which includes production and sales volumes). These estimates and assumptions are subject to risks and uncertainty. Therefore, there is a possibility that changes in circumstances will impact this project, which may impact the recoverable amount of the asset.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Group considers any third party offers or Enterprise Value (EV) that the market participants willing to pay for acquisition of the Group’s shares when forming a view on fair value.

(ii) Exploration and evaluation assetsThe application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement to determine whether future economic benefits are likely, from either exploration or sale, or whether activities have not yet reached a stage which permits a reasonable assessment of the existence of technically feasible and commercially viable reserves. The determination of reserves and resources is itself and estimation process that requires varying degrees of uncertainty depending on how the resources are classified. These estimates directly impact when the Group defers exploration and evaluation expenditure. The deferral policy requires management to make certain estimates and assumptions about future events and circumstances, in particular, whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after expenditure is capitalised, information becomes available suggesting that the recovery of the expenditure is unlikely, the relevant capitalised amount is written off in profit or loss in the statement of comprehensive income in the period when the new information becomes available.

At reporting date, certain tenements have reached a renewal date or will reach a renewal date in the next 12 months. These tenements remain current until an official government expiry notice is issued. The directors are of the opinion that while they are due for renewal, as no expiry notice has been received they remain current. If renewal is not forthcoming, the amounts capitalised will likely be de-recognised.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016(aa) Critical accounting estimates and judgments (cont’d)

(iii) TaxationThe Group’s accounting policy for taxation requires management’s judgement as to the types of arrangements considered to be a tax on income in contrast to an operating cost. Judgement is also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the balance sheet.

Deferred tax assets, including those arising from unrecouped tax losses, capital losses and temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits. Judgements are also required about the application of income tax legislation. These judgements and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the balance sheet and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amounts of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or change to the income statement.

(iv) Share-based paymentsThe Group uses estimates to determine the fair value of equity instruments issued to directors, executives, employees and suppliers. Further detail of estimates used in determining the value of share-based payments is included in Note 25.

(v) Joint arrangements Judgement is required to determine when the Group has joint control over an arrangement, which requires an assessment of the relevant activities and when the decisions in relation to those activities require unanimous consent. The Group has determined that the relevant activities for its joint arrangements are those relating to the operating and capital decisions of the arrangement such as approval of the capital expenditure program for each year or terminating the service providers of the arrangement. The considerations made in determining joint control are similar to those necessary to determine control over subsidiaries.

Judgement is also required to classify a joint arrangement. Classifying the arrangement requires the Group to assess its rights and obligations arising from the arrangement. Specifically, the Group considers:

The structure of the joint arrangement – whether its structured through a separate vehicle When the arrangement is structure through a separate vehicle, the Group also considers the rights and obligations

arising from:- The legal form of the separate vehicle;- The terms of the contractual arrangement; and- Other facts and circumstances (when relevant).

This assessment often requires significant judgement, and a different conclusion on joint control and also whether the arrangement is a joint operation or a joint venture, may materially impact the accounting.

Per agreement with subsidiary shareholders, the relevant activities including financing of certain entities’ are managed and controlled by Cokal until the completion of Initial Work Program (refer note 10). The rights of other shareholders to receive returns and obligations for expenditure are only established when they contribute their share of capital upon completion of the Initial Work Program by Cokal. Given this, to date it has been determined that Cokal controls these entities and hence currently consolidates them as subsidiaries. In future periods, however, the accounting treatment of these entities will be required to be reassessed upon completion of Initial Work Program. This may lead to a change in accounting if it is then determined that instead of controlling these entities, Cokal now only jointly controls these and they are joint arrangements. Depending on whether these joint arrangements are classified as joint ventures or joint operations, this may require either equity accounting (for a joint venture) or recognition of Cokal’s share of the assets, liabilities, income and expenses of the arrangement (for a joint operation). Directors have not reassessed the impact at reporting date as the Initial Work Program has not been completed at this date.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016

Note 2: Revenue and Other Income2016 2015US$ US$

Revenue - -Other income

- Interest income from external parties 18,375 69,300- Consulting fees 400,000 -- Sundry 7,548 -

Total revenue and other income from continuing operations 425,923 69,300

Note 3: Loss for the Period2016US$

2015US$

Loss before income tax includes the following specific expenses:Depreciation on plant and equipment 130,923 200,940Salaries and wages 403,200 653,449Superannuation 14,628 29,331Share-based payments (employee options) 185,487 417,579Exploration expenditure de-recognised 25,655,222 5,250,000Loss on sale of exploration tenement 1,728,233 -Operating lease expense – minimum lease payment 246,921 440,750

Finance costs

Interest on borrowings 170,466 168,959

Facility fees and other borrowing costs 211,650 1,634,921

Expense relating to options issued for extension of loan repayment

- 1,059,651

Note 4: Dividends and Franking CreditsThere were no dividends paid or recommended during the financial year (30 June 2015: Nil).

There were no franking credits available to the shareholders of the Group (30 June 2015: Nil).


Notes to the Consolidated Financial Statements for the year ended 30 June 2016Note 5: Income Tax 2016

US$2015US$

The prima facie income tax on the loss is reconciled to the income tax expense as follows:Prima facie tax benefit (30%) on loss before income tax (9,098,915) (3,913,214)Add tax effect of:

- Not deductible expenses and impact of tax rate differences 9,003,544 2,380,253

- Deferred tax asset not recognised 95,371 1,532,961Income tax expense - -Deferred tax assetsDeductible temporary differences - -Carry forward tax losses 7,769,566 6,293,467

7,769,566 6,293,467Deferred tax liabilitiesAssessable temporary differences - -Net deferred tax assets not recognised 7,769,566 6,293,467

There are no franking credits available to shareholders of Cokal Limited.

The carried forward tax losses and temporary differences not recognised as deferred tax assets as at 30 June 2016 were US$25,898,555 (30 June 2015: US$20,978,223) and US$nil (30 June 2015: US$nil) respectively.

In order to recoup carried forward losses in future periods, either the Continuity of Ownership Test (COT) or Same Business Test must be passed. The majority of losses are carried forward at 30 June 2016 under COT.

Deferred tax assets which have not been recognised as an asset, will only be obtained if:(i) the Group derives future assessable income of a nature and of an amount sufficient to enable the losses to be

realised;(ii) the Group continues to comply with the conditions for deductibility imposed by the law; and (iii) no changes in tax legislation adversely affect the Group in realising the losses

Note 6: Auditors Remuneration2016US$

2015US$

Audit servicesAmounts paid/payable to Ernst & Young for audit or review of the financial statements for the GroupErnst & Young - Australia 92,250 109,647Ernst & Young - Indonesia 33,011 36,564Ernst & Young - Singapore 37,941 36,522

163,202 182,733



Note 7: Loss per ShareLoss attributable to owners of Cokal Limited used to calculate basic and diluted loss per share (30,329,717) (13,044,047)

2016 2015Number Number

Weighted average number of ordinary shares used as the denominator in calculating basic loss per share 499,342,704 472,413,235

Adjustments for calculation of diluted earnings per share:- Options * - -

Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted loss per share 499,342,704 472,413,235

Basic loss per share (cents per share) (6.07) (2.76)Diluted loss per share (cents per share) (6.07) (2.76)* Options are considered anti-dilutive as the Group is loss making.

Options could potentially dilute earnings per share in the future. Refer to Note 17 for details of option granted as at 30 June 2016.

Note 8: Cash and Cash Equivalents2016US$

2015US$

Cash and bank balances 630,425 3,291,808

Cash at bank bear floating and fixed interest rates between 0.10% and 2.78% (2014: between 0. 10% and 3.06%). Included in the consolidated statement of cash flows as follows:

Cash and bank balances * 630,425 3,291,808Less: Short term deposits maturing after three months and restricted bank balance classified as investing activities**

(167,655) (1,538,595)

Cash and cash equivalents 462,770 1,753,213* All deposits are short term investments held at commercial banks.**Include restricted deposit of US$ 138,916 (2015: 138,600) can be used only after TBAR production commences.

Note 9: Accounts Receivable2016 2015US$ US$

CurrentOther receivables* 129,230 138,402

129,230 138,402*No receivable balances are past due or impaired at reporting date.



Note 10: Subsidiariesa) Interest in subsidiariesThe consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in Note 1.

Percentage Owned(%)*Name of entity Country of

Incorporation Class of Shares2016 2015

Jack Doolan Capital Pty Ltd Australia Ordinary 100% 100%Cokal Mozambique Pty Ltd Australia Ordinary 100% 100%Cokal Holdings Pte. Ltd Singapore Ordinary 100% 100%Cokal-AAK Pte. Ltd Singapore Ordinary 100% 100%Cokal-AAM Pte. Ltd Singapore Ordinary - 100%Cokal-BBM Pte. Ltd Singapore Ordinary 100% 100%Cokal-BBP Pte. Ltd Singapore Ordinary 100% 100%Cokal Services Pte. Ltd Singapore Ordinary 100% 100%Cokal Karoo Pte. Ltd Singapore Ordinary 100% 100%Cokal Manda Pte. Ltd Singapore Ordinary 100% 100%Cokal-West Kalimantan Pte. Ltd Singapore Ordinary 100% 100%Cokal-BPR Pte. Ltd Singapore Ordinary 100% 100%Cokal-TBAR Pte. Ltd Singapore Ordinary 100% 100%Mining Logistics Pte. Ltd Singapore Ordinary 100% 100%Cokal-KED Pte. Ltd Singapore Ordinary 100% 100%Cokal Resources Limited Tanzania Ordinary 100% 100%PT Cokal Indonesia Ordinary 100% 100%PT Bumi Kalimantan Logistik (BKL) Indonesia Ordinary 100% 100%PT Anugerah Alam Katingan^ (AAK) Indonesia Ordinary 75% 75%PT Anugerah Alam Manuhing (AAM)+ Indonesia Ordinary - 75%PT Bumi Barito Mineral^ (BBM) Indonesia Ordinary 60% 60%PT Borneo Bara Prima ^ (BBP) Indonesia Ordinary 60% 60%PT Silangkop Nusa Raya^ (SNR)** Indonesia Ordinary 75.2% 75.2%PT Tambang Benua Alam Raya# (TBAR) Indonesia Ordinary 75% 75%* the proportion of ownership interest is equal to the proportion of voting power held.^ at reporting date, the capital of these companies represents only the contributions from Cokal. Per agreement, the right of non-controlling shareholders’ receiving return is established only when they contribute their share of capital upon completion of the Initial Work Programs for each of the projects by Cokal. At reporting date, the Initial Work Programs for these projects have not yet been completed and therefore no capital has been contributed by the non-controlling shareholders.# in process of transferring the shares to the Group.+ Disposed during the year** Sale agreement executed for disposal of SNR & KNR, whose asset values reduced to likely sale proceeds.

b) Financial information of subsidiariesFinancial information of subsidiaries that will have material non-controlling interests are provided below. The balances of non-controlling interests are not material at 30 June 2016 and 30 June 2015.

Proportion of equity interest held by non-controlling interests:

Name of entity Country of incorporation and operation

2016 2015

PT Bumi Barito Mineral (BBM) Indonesia 40% 40%PT Borneo Bara Prima (BBP) Indonesia 40% 40%Accumulated balances of material non-controlling interest 2016

US$ ^2015

US$ ^BBM - -BBP - -Profit/(loss) allocated to material non-controlling interest:BBM - -BBP - -

^at reporting date, the capital of these companies represents only the contributions from Cokal. Per agreement, the right of non-controlling shareholders’ receiving return is established only when they contribute their share of capital upon completion of the Initial Work Programs for each of the projects by Cokal. At reporting date, the Initial Work Programs for these projects have not yet been completed and therefore no capital has been contributed by the non-controlling shareholders.



Note 10: Subsidiaries (cont’d)The summarised financial information of these subsidiaries is provided below. This information is based on amounts before inter-company eliminations.

Summarised statement of comprehensive income for the year ended 30 June 2016US$BBM

US$BBP

Other operating expenses (1,513,705) (4,126,378)Loss before tax (1,513,705) (4,126,378)Income tax expense - -Profit/(Loss) for the period from continuing operations (1,513,705) (4,126,378)Total comprehensive income (1,513,705) (4,126,378)Attributable to non-controlling interests - -Dividends paid to non-controlling interests - -

Summarised statement of comprehensive income for the year ended 30 June 2015 US$BBM

US$BBP

Other operating expenses (1,511,921) (86,541)Loss before tax (1,511,921) (86,541)Income tax expense - -Profit/(Loss) for the period from continuing operations (1,511,921) (86,541)Total comprehensive income (1,511,921) (86,541)Attributable to non-controlling interests - -Dividends paid to non-controlling interests - -

Summarised statement of financial position as at 30 June 2016 US$BBM

US$BBP

Property, plant and equipment and exploration and evaluation assets 27,305,337 -Cash and other receivables 421 -Trade and other payables (438,200) (226,722)Loan from immediate holding company (non-current) (35,438,430) (4,205,633)Total Equity (8,570,872) (4,432,355)Attributable to: Equity holders of parent (8,570,872) (4,432,355) Non-controlling interest - -

Summarised statement of financial position as at 30 June 2015 US$BBM

US$BBP

Property, plant and equipment and exploration and evaluation assets 25,254,874 3,727,502Cash and other receivables 12,085 -Trade and other payables (368,727) (20,334)Loan from immediate holding company (non-current) (31,955,399) (4,013,145)Total Equity (7,057,167) (305,977)Attributable to: Equity holders of parent (7,057,167) (305,977) Non-controlling interest - -

Summarised statement of cash flow for 2016 US$BBM

US$BBP

Cash flow from operating activities (1,444,231) (29,258)Cash flow from investment activities (723,547) (2,350)Cash flow from financing activities 2,167,778 31,609Net increase/(decrease) - -

Summarised statement of cash flow for 2015 US$BBM

US$BBP

Cash flow from operating activities (1,457,466) (85,203)Cash flow from investment activities (4,664,782) (238,109)Cash flow from financing activities 6,122,248 323,312Net increase/(decrease) - -



Note 11: Joint ArrangementsTanzaniaCokal has joint arrangements to explore for coal in Tanzania. The joint arrangements are with a private company, Tanzoz Resource Company Ltd which has been active in Tanzania since 2007, and currently holds interests in Tanzania for uranium, gold and coal.

Percentage Owned(%)*Name of entity Country of Incorporation Class of Shares

2016 2015Cokal Karoo Limited^ Tanzania Ordinary 60% 60%Cokal Manda Limited^ Tanzania Ordinary 50% 50%* the proportion of ownership interest is equal to the proportion of voting power held. ^ the Group has not undertaken any activities. The expenditures incurred have been fully written down in previous years as they are no longer recoverable.

IndonesiaThe Group has executed a joint arrangement agreement with Meratus Advance Maritim (MDM), an Indonesian company, to engage in the ownership of push tugs and barges for shallow river operations. The parties wish to establish a mutually owned limited company for this operation and the registration of this is in progress. The company will have the operations should Cokal commence production and other conditions precedent are satisfied. At 30 June 2016, no activities to establish this company had been carried out.

Note 12: Property, Plant and Equipment2016US$

2015US$

LandAt cost 31,526 31,526Computer equipmentAt cost 552,886 552,886Accumulated depreciation (549,609) (477,615)

3,277 75,271Furniture and office equipmentAt cost 552,957 569,392Accumulated depreciation (255,494) (214,856)

297,463 354,536Motor VehiclesAt cost 9,974 9,974Accumulated depreciation (8,475) (6,480)

1,499 3,494Capital WIP

At cost 1,168,254 1,163,254

Total property, plant and equipment 1,502,019 1,628,081



Note 12: Property, Plant and Equipment (cont’d)(a) Movements in carrying amounts

2016 LandComputer equipment

Furniture and office

equipment

Motor Vehicles

Capital WIPTotal

US$ US$ US$ US$ US$ US$Balance at the beginning of the year 31,526 75,271 354,536 3,494 1,163,254 1,628,081Additions - - - - 5,000 5,000Disposals - (27) (112) - - (139)Depreciation expense - (71,967) (56,961) (1,995) - (130,923)Carrying amount at the end of the year

31,526 3,277 297,463 1,499 1,168,254 1,502,019

2015 LandComputer equipment

Furniture and office

equipment

Motor Vehicles

Capital WIPTotal

US$ US$ US$ US$ US$ US$Balance at the beginning of the year 31,526 208,212 417,562 5,486 230,607 893,393Additions - 2,981 - - 932,647 935,628Disposals - - - - - -Depreciation expense - (135,922) (63,026) (1,992) - (200,940)Carrying amount at the end of the year

31,526 75,271 354,536 3,494 1,163,254 1,628,081

Note 13: Exploration and Evaluation Assets2016US$

2015US$

Non-CurrentExploration and evaluation expenditure capitalised- exploration and evaluation phases 32,740,312 59,424,333Recoverability of the carrying amount of exploration and evaluation assets is dependent on the successful development and commercial exploitation of coal, or alternatively, sale of the respective areas of interest.(a) Movements in carrying amounts in exploration and evaluation (E&E) assetsBalance at the beginning of the period 59,424,333 61,519,643Additions 759,171 3,154,690Disposals** (1,787,970) -Exploration expenditure de-recognised* (25,655,222) (5,250,000)Written off - -Carrying amount at the end of the period 32,740,312 59,424,333

* Based on the assessment under AASB 6 at 30 June 2016, Cokal while still maintaining and wishing to pursue all projects (excluding tenements sold during the period) has decided to focus on the core central Kalimantan tenements which are more likely to be developed in the short term.Cokal considers, as it is not currently planning to focus on and expend substantive expenditure on further exploration for and evaluation of mineral resources in the tenements other than PT Bumi Barito Mineral (BBM) neither is any budgeted nor planned that it will write off these E&E assets. Such exploration expenditure de-recognised primarily relate to PT Borneo Bara Prima (BBP), PT Anugerah Alam Katingan (AAK), PT Silangkop Nusa Raya (SNR), PT Tambang Benua Alam Raya (TBAR). The remaining carrying value represents PT Bumi Barito Mineral (BBM) project. Management remains confident that the group will raise additional funding for development of BBM and sufficient data exists to indicate the carrying value of BBM is likely to be recovered in full from successful development or by sale.

The de-recognition of exploration expenditure is determined using the Fair Value Less Cost to Method (FVLCD) considering the entity as one CGU as the tenements are at exploration stage. The FVLCD is determined using the Enterprise Value (EV). EV is implied by Cokal’s Market Capitalisation plus a control provision. The fair value measurement is categorised under Level 1 hierarchy. The excess of recoverable value than the carrying value of E&E is allocated for de-recognition in the order of planned substantive expenditure on further exploration for and evaluation of mineral resources.

**Disposal represents sale of PT Anugerah Alam Manuhing (AAM) project, a loss of $1,728,233 is recognised in Profit & Loss.



Note 14: Other Assets2016US$

2015US$

CurrentPrepayments - 232,742Non-CurrentSecurity deposits 186,150 191,312

Note 15: Accounts Payable and Others2016US$

2015US$

CurrentSundry payables and accrued expenses 852,468 696,551Employee benefits 47,446 185,343Deferred liability * 257,927 57,927

1,157,841 939,821Non-CurrentDeferred liability * 14,482 72,409* Deferred liability represents the unamortised deferred benefit relating to operating lease incentives of USD 57,927 (2015: USD 57,927) which have not yet been credited to profit or loss and the deposit received for sale of SNR &KNR tenements of USD 200,000 (2015: Nil)

Note 16: Interest Bearing Loans2016US$

2015US$

CurrentPlatinum Partners facility 10,065,000 10,065,000Blumont Group facility 3,827,302 -

Total Current 13,892,302 10,065,000

Non-CurrentBlumont Group facility - 3,656,836

Total Non-Current - 3,656,836

Total Interest bearing loans 13,892,302 13,721,836

Blumont Group FacilityOn 5 November 2013, the Group entered into a loan facility agreement with Blumont Group Limited, a shareholder. Under this facility the Group has drawn down US$3.4 million (30 June 2015: US$3.4m) and no further drawdown is expected under this facility in the future periods.

The loan is repayable within 3 years, interest is 5% per annum, payable quarterly in arrears and can be capitalised and repaid at maturity. The facility is secured by up to 5% of Cokal’s shares in Cokal Holdings Pte Ltd. If a future placement is made to Blumont and should the subscription agreement require, the placement funds received from Blumont will be used to repay the loan. The loan is otherwise on customary terms and conditions for a loan of this nature, size and type.

Platinum Partners FacilityOn 29 March 2014, the Group entered into a short term loan agreement for US$3.5m with Platinum Partners (Platinum) for working capital. The loan is subject to withhold (prepaid interest) at the date of utilisation the aggregate amount of:

US$600,000, as a non-refundable work fee payable to the lender in respect of the facility; and US$150,000, as the borrower's contribution for costs and expenses as stipulated in the agreement, the balance of

which amount is refundable on the repayment date to the extent not utilised by the lender.

On 6 August 2014, the Group entered into an additional short term loan agreement for US$5.65m with Platinum for working capital. The loan is subject to withhold (prepaid interest) at the date of utilisation the aggregate amount of:

US$500,000, as a non-refundable work fee payable to the lender in respect of the facility; and US$150,000, as the borrower's contribution for costs and expenses as stipulated in the agreement, the balance of

which amount is refundable on the repayment date to the extent not utilised by the lender.



Note 16: Interest Bearing Loans (cont’d)During the year, Cokal announced the total fund managed by Platinum has extended the term of its bridging loan facility to 6 August 2015. Upon extension the total loan for the project development to date totalled US$10,065,000 including additional non-refundable working fee for the extension of US$ 915,000. The present intention is that the loan will be refinanced by the BBM project financing facility once it is in place upon receipt of forestry permit (refer Note 28).

Under the extension agreement, Cokal granted the following options to Platinum: On 27 August 2014, 15,000,000 options at US$ 0.186 expiring on 27 August 2018; and

On 6 February 2015, 25,000,000 options at US$ 0.101 expiring on 6 February 2019.

The options will be exercisable at any time before expiry. Payment of the exercise price may be satisfied by the holder paying the exercise price in cash or causing the provider of the bridge loan or project finance to reduce the principal owing by the amount of the exercise price. Shares issued on exercise of an option rank equally with all other ordinary shares then on issue.

The full amount of Platinum loan was repayable on 6 August 2015. The extension is still being negotiated and no demand for repayment has been received. As disclosed in Note 2, subsequent to year end the Directors announced Cokal had reached an agreement with Blumont Group and Platinum Partners for the conversion of all outstanding loans owing to them to production royalties (refer note 28 for more details). The parties are working to finalise these arrangements at this date.

The loans are secured by 950 ordinary shares and 46,608,900 preference shares of Cokal Holdings Pte. Ltd. and for all shares of Cokal-BBM Pte. Ltd.

Note 17: Issued Capital2016US$

2015US$

499,342,704 authorised and fully paid ordinary shares (30 June 2015: 499,342,704) 83,622,140 83,622,140

The movement in Issued capital is as follows : 2016 2015US$ US$

At the beginning of the year 83,622,140 81,710,873Amount received for issue of shares during the year

- Share issue from capital raising - 1,935,100- Conversion of options to shares - -- Share issue to consultant and employee - 92,273- Cost of share issue - (116,106)

At reporting date 83,622,140 83,622,140

2016Number

2015Number

(a) Ordinary sharesAt the beginning of the year 499,342,704 471,103,926Shares issued during the year

- Share issue from capital raising - 27,777,778- Ordinary share issue - 461,000

At reporting date 499,342,704 499,342,704

During the year there were no shares issued.



Note 17: Issued Capital (cont’d)(b) Options

All options on issue at 30 June 2016 were as follows:Number of options Exercise price

US$Expiry date

Employees:350,000 0.77 12 October 2016

4,000,000 0.20 11 July 20175,800,000 0.23 11 July 2017

10,000,000 0.10 24 February 2019Platinum:

15,000,000 0.19 27 August 201825,000,000 0.10 6 February 201960,150,000

For information relating to the Cokal Limited employee option plan, including details of options issued, exercised and lapsed during the year and the options outstanding at year-end refer to Note 25.

(c) Capital Risk ManagementManagement controls the capital of the Group in order to provide capital growth to shareholders and ensure the Group can fund its operations and continue as a going concern.

The Group capital comprises equity as shown in the Statement of Financial Position. There are no externally imposed capital requirements other than shown in note 16.

Management effectively manages the Group capital by assessing the Group financial risks and adjusting its capital structure in response to changes in these risks and the market. These responses include raising the sufficient equity capital when required.

There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year.

Note 18: Reserves2016 2015US$ US$

Share based payments option reserve 6,307,249 6,121,762

Translation reserve (1,455,455) (1,550,584)

4,851,794 4,571,178

The option reserve records the value of options issued as part of capital raisings, extensions for loans as well as expenses relating to director, executive and employee share options.

Translation reserve represents the net exchange differences arising from the translation as a result of change in presentation currency to USD from AU$. The reduction represents the translation reserves relating to AAM transferred to profit or loss on disposal.



Note 19: Accumulated Losses2016US$

2015US$

Accumulated losses attributable to members of Cokal Limited at beginning of the year (38,020,706) (24,976,659)

Loss for the year (30,329,717) (13,044,047)Accumulated losses attributable to members of Cokal Limited at the end of the year (68,350,423) (38,020,706)

Note 20: Parent Entity InformationThe consolidated financial statements incorporate the assets, liabilities and results of the parent entity in accordance with the accounting policy described in Note 1.

2016 2015Parent Entity

US$ US$Current assets 537,047 3,444,683Non-current assets 33,703,483 78,304,888Total assets 34,240,530 81,749,571Current liabilities 13,993,962 10,491,488Non-current liabilities 123,057 3,656,836Total liabilities 14,117,019 14,148,324Net assets 20,123,511 67,601,247Issued capital 83,622,140 83,622,140Reserves 6,307,249 6,121,763Revaluation reserve (3,565,142) (3,565,142)Accumulated losses (66,240,736) (18,577,514)Total shareholder’s equity 20,123,511 67,601,247Loss for the year (47,663,222) (5,746,387)Total comprehensive loss for the year (47,663,222) (5,746,387)

GuaranteesThe parent entity has set up wholly owned special purpose entities (SPEs) in Singapore to hold ownership interests in Indonesia and Tanzania entities and provided an undertaking to financially support SPEs to meet their liabilities as and when they fall due.

Contractual CommitmentsThere were no contractual commitments for the acquisition of property, plant and equipment entered into by the parent entity at 30 June 2016 (2015 – nil).

Contingent liabilitiesThe parent entity has no contingent liabilities.

Capital commitmentsThe parent entity has no capital commitments.

Impairment assessmentAt 30 June 2016 the parent entity Cokal Limited recorded its investment and loan in controlled entities at USD80,7million. Cokal Limited also recorded net assets of USD67.1 million. At 30 June 2016 an impairment assessment was made based on the Enterprise Value (EV) resulting in an assessed net asset value of USD20.1 million. The directors have determined this to be fair and reasonable until such time that they are able to obtain funding for the Group’s projects and deliver the value of the projects. On this basis the directors have made an impairment adjustment of USD47 million to the carrying values of investments in subsidiaries included in the statement of financial position of Cokal Limited as an individual entity.



Note 21: Commitments2016 2015US$ US$

(a) Operating lease commitmentsFuture minimum rentals payable under non-cancellable operating leases as at 30 June 2016 are as follows:Payable- not later than 12 months 427,287 347,977- between 12 months and 5 years 189,460 454,960- greater than 5 years - -

616,747 802,937

Note 22: Contingent LiabilitiesThe contingent liabilities are in relation to the acquisition of tenements. At 30 June 2016, the Group has further obligations to make contingent payments of up to US$24.70m (30 June 2015: US$24.70m) on the achievement of certain milestones, including the establishment of certain JORC Inferred Coal Resources and the issuance of production operation IUPs (licences) and production forestry permit.

Cokal received the BBM’s forestry permit in August 2015. Per agreement, US$10m final payment for BBM is required to be paid upon receipt of Forestry Permit (milestone achieved) and other conditions precedent. However, Directors believe obligation for payment of this liability effective 13 August 2015 is not satisfied until the commencement of BBM development activities.

The Group executed a joint operating agreement with MDM, an Indonesian Group, to engage in the ownership of push tugs and barges for shallow river operations. The parties wish to establish a jointly owned company for this operation and the registration of this is in progress. The jointly owned company will manage the barging operation for the BBM project should production commence and other conditions precedent take place. Once the jointly owned company is incorporated, Cokal will hold 49% interest by contributing an estimated US$11 million (49% ordinary share capital of jointly owned company, Indonesian Rupiah 200 billion).

The directors are not aware of any other significant contingent liabilities at the date of this report.


Notes to the Consolidated Financial Statements for the year ended 30 June 201623: Operating SegmentsAASB 8 requires operating segments to be identified on the basis of internal reports that are used by the CODM in order to allocate resources to the segment and to assess its performance. As noted earlier, the CODM of the Group are the Board of Directors. For management purposes, the Group is organised into three main operating segments, which involves the exploration for coal in Indonesia, Tanzania and Australia. The Singapore entity was considered separately for corporate services.

Australia Indonesia Singapore Tanzania Total

US$ US$ US$ US$ US$

Segment performance for the year ended 30 June 2016

Revenue

Other revenue 407,575 (27) - - 407,548

Interest revenue 17,585 790 1,591,054 - 1,609,429

Intersegment income* - - (1,591,054) - (1,591,054)

Total segment income 425,160 763 - - 425,923

Depreciation expenses 101,550 29,373 - - 130,923

Finance costs 382,116 - - - 382,116

Exploration expenditure de-recognised - 25,655,222 - - 25,655,222

Other expenses 1,297,512 3,158,961 130,906 - 4,587,379

Total segment expenses 1,781,178 28,843,556 130,906 - 30,755,640

Segment net loss before tax (1,356,018) (28,842,793) (130,906) - (30,329,717)

Segment assets and liabilities as at 30 June 2016

Property, plant and equipment 195,416 1,306,603 - - 1,502,019

Exploration and evaluation assets - 32,740,312 - - 32,740,312

Other segment assets 705,079 240,726 - - 945,805

Total segment assets 900,495 34,287,641 - - 35,188,136

Total segment liabilities 14,067,770 701,882 294,973 - 15,064,625

Capital expenditure for the year ended 30 June 2016

Property, plant and equipment - 5,000 - - 5,000

Exploration and evaluation assets - 759,171 - - 759,171*Inter segment expense relating to the income is eliminated in Indonesia’s exploration and evaluation assets.


Notes to the Consolidated Financial Statements for the year ended 30 June 201623: Operating Segments (cont’d)

Australia Indonesia Singapore Tanzania Total

US$ US$ US$ US$ US$

Segment performance for year ended 30 June 2015

Revenue

Other revenue - - - - -

Interest revenue 48,354 20,946 1,264,657 - 1,333,957

Intersegment income* - - (1,264,657) - (1,264,657)

Total segment income 48,354 20,946 - - 69,300

Depreciation expenses 137,242 63,698 - - 200,940

Finance costs 2,863,531 - - - 2,863,531

Exploration expenditure de-recognised - 5,250,000 - - 5,250,000

Other expenses 3,395,199 1,280,001 123,676 - 4,798,876

Total segment expenses 6,395,972 6,593,699 123,676 - 13,113,347

Segment net loss before tax (6,347,618) (6,572,753) (123,676) - (13,044,047)

Segment assets and liabilities as at 30 June 2015

Property, plant and equipment 297,078 1,331,003 - - 1,628,081

Exploration and evaluation assets - 59,424,333 - - 59,424,333

Other segment assets 3,557,604 296,660 - - 3,854,264

Total segment assets 3,854,682 61,051,996 - - 64,906,678

Total segment liabilities 14,236,898 447,593 49,575 - 14,734,066

Capital expenditure for the year ended 30 June 2015

Property, plant and equipment - 935,628 - - 935,628

Exploration and evaluation assets - 3,154,690 - - 3,154,690*Inter segment expense relating to the income is eliminated in Indonesia’s exploration and evaluation assets.

Note 24: Cashflow Information2016US$

2015US$

(a) Reconciliation of loss after income tax to net cash flow used in operating activities

Loss for the year (30,329,717) (13,044,047)

Depreciation 130,923 200,940

Exploration expenditure de-recognised 25,655,222 5,250,000

Share options and shares expensed 185,487 417,579

Loss on sale of exploration tenement 1,728,233 -

Accrued Interest and finance costs - 1,048,531

Property, plant and equipment write off 139 -

Non-cash finance cost 382,116 -

Unrealised exchange loss/(gain) 25,286 395,694

Change in operating assets and liabilities:

- (Increase)/Decrease in accounts receivables

72,024 47,938

- Increase/(Decrease) in accounts payables 118,333 142,369

Net cash flow used in operating activities (2,031,954) (5,540,996)



Note 25: Share-based PaymentsThe following share-based payment arrangements existed at 30 June 2016.

(a) Share-based payments to directors, executives, employees and suppliers

During the period ended 30 June 2016, no options were issued to directors, executives, employees and suppliers of the Group:

All options issued by Cokal Limited entitle the holder to one ordinary share in Cokal Limited for each option exercised. The options were granted for nil consideration. Once vested, options can be exercised at any time up to the expiry date.

30 June 2016 30 June 2015

No. of options Weighted average exercise price

No. of options Weighted average exercise price *

$ $

Outstanding at beginning of period 26,150,000 0.28 20,525,000 0.59

Granted - - 10,000,000 0.10

Forfeited/Cancelled (1,000,000) 0.23 (4,375,000) (0.69)

Exercised - - - -

Expired (5,000,000) 1.32 - -

Outstanding at period-end 20,150,000 0.13 26,150,000 0.28

Exercisable at period-end 14,650,000 0.19 7,350,000 0.99

The options outstanding at 30 June 2016 had a weighted average exercise price of US$0.17 (2015: US$0.39) and weighted average remaining contractual life of 1.23 years (30 June 2015: 2.29 years).

Pursuant to the Group’s Incentive Option Scheme, if an employee ceases to be employed by the Group then options will expire three months from the date employment ceases.

Options to Suppliers• On 27 August 2014, 15,000,000 options were issued to Platinum Partners at US$ 0.186 expiring on 27 August 2018,

under the extension agreement.• On 6 February 2015, 25,000,000 options were issued to Platinum Partners at US$ 0.101 expiring on 6 February 2019,

under the extension agreement.

The options will be exercisable at any time before expiry. Payment of the exercise price may be satisfied by the holder paying the exercise price in cash or causing the provider of the bridge loan or project finance to reduce the principal owing by the amount of the exercise price. Shares issued on exercise of an option rank equally with all other ordinary shares then on issue.

On 7 April 2016 Cokal Limited announced that it will grant to a fund managed by Platinum Partners, 50 million options with an exercise price of A$0.05 and an exercise period of 4 years from the date of grant for its forbearance in not calling a bridging loan extended on 30 January 2015 which was due for repayment on 6 August 2015. The grant is subject to shareholder approval on or before the next annual general meeting. These options were not issued as of 30 June 2016.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016Note 26: Related Party DisclosureTransactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

(a) Parent entity

The parent entity and ultimate controlling entity is Cokal Limited, which is incorporated in Australia.

(b) SubsidiariesInterests and transactions in subsidiaries are disclosed in Note 10.

(c) Key management personnel (KMP) compensation

The KMP compensation for the year ended are set out below:

2016US$

2015US$

Short-term employee benefits* 1,042,714 1,301,254Post-employment benefits 13,104 21,064Share-based payments 168,406 309,475

1,224,224 1,631,793* Directors are not salary paid, but their fees are included in the short-term employee benefits. The terms of directors’ services are described below.

Options holdings of KMP for the year ended are:Balance

1 July 2015Granted as

RemunerationExercise of

OptionsNet Change

OtherBalance

30 June 2016Total vested at 30 June

2016

Total vested and

exercisable at30 June 2016


30 June 2016

Directors - - - - - - - -Senior Management

23,000,000 - - (4,500,000) 18,500,000 13,500,000 13,500,000-

Total 23,000,000 - - (4,500,000) 18,500,000 13,500,000 13,500,000 -

Balance1 July 2014


Exercise of Options

Net Change Other

Balance30 June 2015


2015

Total vested and

exercisable at30 June 2015


30 June 2015

Directors - - - - - - - --Senior Management 14,000,000 9,000,000 - - 23,000,000 2,000,000 7,000,000 --Total 14,000,000 9,000,000 - - 23,000,000 2,000,000 7,000,000 --

Share options held by KMP under the Senior Executive Plan to purchase ordinary shares have the following expiry dates and exercise prices:

2016Number of options

outstanding

2015Number of options

outstanding

Exercise priceUS$

Issued date Vesting date Expiry date

- 3,000,000 1.150 24-Aug-11 5-Sep-13 5-Sep-15- 2,000,000 1.570 24-Aug-11 5-Sep-13 5-Sep-15

2,000,000 2,000,000 0.230 11-Jul-13 11-Jul-14 11-Jul-172,000,000 2,000,000 0.230 11-Jul-13 11-Jul-15 11-Jul-175,000,000 5,000,000 0.230 11-Jul-13 11-Jul-15 11-Jul-174,500,000 4,500,000 0.100 24-Feb-15 24-Feb-16 24-Feb-195,000,000 4,500,000 0.100 24-Feb-15 24-Feb-17 24-Feb-19

18,500,000 23,000,000


Notes to the Consolidated Financial Statements for the year ended 30 June 2016Note 26: Related Party Disclosure (Cont’d)Shareholdings of KMP for the year ended are:

Balance1 July 2015



Net ChangeOther

Balance30 June 2016

Directors 113,372,001 - - (30,131,200) 83,240,801Senior Management 3,108,215 - - 225,00 3,333,215Total 116,480,216 - - - 86,574,016

Balance1 July 2014



Net ChangeOther

Balance30 June 2015

Directors 113,372,001 - - - 113,372,001Senior Management 3,108,215 - - - 3,108,215Total 116,480,216 - - - 116,480,216

Advances to KMP at 30 June 2015 have been included in other receivables. The details of these advances are:

2016US$

2015US$

Peter Lynch 2,844 2,8442,844 2,844

Advances made relate to travel advances and are made in the ordinary course of business under the Group’s normal travel policies.Terms of directors’ services: During the year ended 30 June 2016, Hanna Consulting Services Pty Ltd (of which Pat Hanna is a director) provided to

the Group geological consulting services for various exploration projects in Indonesia including site management, geological staff recruitment, preparation of field base camp and geological mapping surveys. Hanna Consulting Services Pty Ltd received US$84,944 (2015: US$164,146) for these services during the year. The services were based on normal commercial terms and conditions.

During the year ended 30 June 2016, Petla Trust (of which Peter Lynch is a director) provided to the Group consulting services. Petla Trust received US$174,136 (2015: US$253,982) for these services during the year. The services were based on normal commercial terms and conditions.

During the year ended 30 June 2016, the Group paid consulting fees of US$nil (2015: US$44,476) to PT. Pandu Wira Sejahtera of which Harun Abidin is a director. Harun is also a director of PT. Anugerah Alam Manuhing, PT. Anugerah Alam Katingan and PT. Silangkop Nusa Raya. The services were based on normal commercial terms and conditions.

Note 27: Financial Risk Management(a) General objectives, policies and processesIn common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note. The Group’s financial instruments consist mainly of deposits with banks, accounts receivable, security deposits, interest bearing loans and accounts payable.

The Board has overall responsibility for the determination of the Group’s financial risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group’s finance function. The Group’s financial risk management policies and objectives are therefore designed to minimise the potential impacts of these risks on the results of the Group where such impacts may be material.

The overall objective of the Board is to set policies that seek to reduce financial risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. Further details regarding these policies are set out below.


Notes to the Consolidated Financial Statements for the year ended 30 June 2016Note 27: Financial Risk Management (Cont’d)(b) Credit riskCredit risk is the risk that the other party to a financial instrument will fail to discharge their obligation resulting in the Group incurring a financial loss. This usually occurs when debtors fail to settle their obligations owing to the Group. The Group’s objective is to minimise the risk of loss from credit risk exposure.

The Group’s maximum exposure to credit risk at the end of the reporting period, without taking into account the value of any collateral or other security, in the event other parties fail to perform their obligations under financial instruments in relation to each class of recognised financial asset at reporting date, is as follows:

2016 2015Note

US$ US$Cash and bank balances 8 630,425 3,291,808Receivables 9 129,230 138,402Security deposits 14 186,150 191,312Total 945,805 3,621,522

Credit risk is reviewed regularly by the Board and the Audit Committee.

The Group does not have any material credit risk exposure to any single debtor or Group of debtors under financial instruments entered into by the Group. No receivables balances were past due or impaired at period end. The credit quality of receivables that are neither past due nor impaired is good. Bank deposits are held with Macquarie Bank Limited, National Australia Bank Limited and Australia and New Zealand Banking Corporation Limited.

(c) Liquidity RiskLiquidity risk is the risk that the Group may encounter difficulties raising funds to meet financial obligations as they fall due. The objective of managing liquidity risk is to ensure, as far as possible, that the Group will always have sufficient liquidity to meets its liabilities when they fall due, under both normal and stressed conditions.

Liquidity risk is reviewed regularly by the Board and the Audit Committee.

The Group manages liquidity risk by monitoring forecast cash flows and liquidity ratios such as working capital. The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:

Carrying Amount

Contractual Cash flows <6 months 6 – 12 months 1 – 3 years >3 years

US$ US$ US$ US$ US$ US$MATURITY ANALYSIS– 30 June 2016Financial Liabilities

- Accounts payable 588,753 588,753 588,753 - - -- Interest bearing loans 13,892,302 13,892,302 13,892,302 - - -- Total 14,481,055 14,481,055 14,481,055 - - -

Carrying Amount Contractual Cash flows <6 months 6 – 12 months 1 – 3 years >3 years

US$ US$ US$ US$ US$ US$MATURITY ANALYSIS– 30 June 2015Financial Liabilities

- Accounts payable 923,653 923,653 853,628 70,025 - -- Interest bearing loans 13,721,836 13,952,384 10,065,000 - 3,887,384 -- Total 14,645,489 14,876,037 10,918,628 70,025 3,887,384 -

Further information regarding commitments is included in Note 21.



Note 27: Financial Risk Management (cont’d)(d) Market Risk

Market risk arises from the use of interest bearing, tradable and foreign currency financial instruments. It is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign exchange rates (currency risk) or other market factors (other price risk). The entity does not have any material exposure to market risk other than as set out below.

(i) Interest rate risk

Interest rate risk arises principally from cash and cash equivalents. The objective of interest rate risk management is to manage and control interest rate risk exposures within acceptable parameters while optimising the return.

Interest rate risk is managed with fixed rate debt. For further details on interest rate risk refer to the tables below:

2016 Floating interest rate Fixed interest rate Non-interest bearing

Total carrying amount

Weighted average effective

interest rate

US$ US$ US$ US$ %Financial assetsCash and bank balances 461,735 167,655 1,035 630,425 1.17Receivables - - 129,230 129,230 -Security deposits - - 186,150 186,150 -Total financial assets 461,735 167,655 316,415 945,805 Financial liabilitiesAccounts payable - - 661,161 661,161 -Interest bearing loans - 13,892,302 - 13,892,302 2.75Total financial liabilities - 13,892,302 661,161 14,553,463 -

2015 Floating interest rate

Fixed interest rate Non-interest bearing

Total carrying amount

Weighted average effective

interest rate

US$ US$ US$ US$ %Financial assetsCash and bank balances 1,752,570 1,538,596 642 3,291,808 1.02Receivables - - 180,162 180,162 -Security deposits - - 191,312 191,312 -Total financial assets 1,752,570 1,538,596 372,116 3,663,282Financial liabilitiesAccounts payable - - 1,053,990 1,053,990 -Interest bearing loans - 13,721,836 - 13,721,836 11.99Total financial liabilities - 13,721,836 1,053,990 14,775,826

The Group has performed a sensitivity analysis relating to its exposure to interest rate risk. This sensitivity demonstrates the effect on the current period results and equity which could result from a change in these risks.



Note 27: Financial Risk Management (cont’d)(i) Interest rate risk (cont’d)

At 30 June 2016 the effect on post tax profit and equity as a result of changes in the interest rate for floating interest rate instruments, with all other variables held constant, would be as follows:

Carrying Amount(interest bearing)

Increase in interest rate by 0.5%

Decrease in interest rate by 0.5%

US$ US$ US$2016

Cash and cash equivalents 461,733 2,309 (2,309)

Total effect on post tax profit 461,733 2,309 (2,309)

2015

Cash and cash equivalents 1,752,570 8,763 (8,763)

Total effect on post tax profit 1,752,570 8,763 (8,763)

(ii) Currency riskExposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating due to movement in foreign exchange rates of currencies in which the Group hold financial instruments which are other than the US$ functional currency of the Group.

The Group is exposed to currency risk on its cash and cash equivalents held (in AUD and Indonesian Rupiah) in Indonesia and Australia as well as on purchases made from suppliers in Indonesia and Australia.

The Group’s exposure to foreign currency risk and the effect on post tax profit as a result of changes in foreign currency rates, with all other variables held constant, are as follows:

AU$ Indonesian Rupiah

Total

US$ US$ US$2016

Cash and cash equivalents 212,787 54,126 266,913

Accounts payable 103,061 30,161 133,222

Net exposure 315,848 84,287 400,135

Effect on post profit:

Increase by 10% 31,585 8,429 40,014

Decrease by 10% (31,585) (8,429) (40,014)

2015

Cash and cash equivalents 1,641,265 108,450 1,749,715

Accounts payable (341,433) (154,308) (495,741)

Net exposure 1,299,832 (45,858) 1,253,974

Effect on post tax profit:

Increase by 10% 129,983 (4,586) 125,397

Decrease by 10% (129,983) 4,586 (125,397)



Note 28: Significant Events after the Reporting Date

a) On 22 July it was announced, Cokal has reached agreement with Platinum Partners Value Arbitrage Fund, LP (Platinum) to convert approximately USD15 million of loans owing by Cokal to various funds managed by Platinum or its affiliates (the Platinum Group). Those loans include the Blumont loan, which was acquired by the Platinum Group.

The agreed conversion terms and conditions are as follows. In consideration for the restructuring of the debt, Platinum will be entitled to a royalty on coal sold from Cokal’s

share of production from the Bumi Barito Mineral Project (BBM) and PT Tambang Benua Alam Raya (TBAR) projects.

The royalty will be 1% of the realized selling price (FOB) (i.e. selling price per tonne x tonnes sold x 1%) up to a maximum royalty amount of USD40 million.

Cokal or its related parties will have the right to buy out the royalty at any time for the amount of USD40 million less amounts paid on the royalty at that time.

Cokal will do what is legally possible to attach the royalty directly to the tenement asset (IUP not the IUP holding company) or other legal instrument, so that Platinum is protected against any forced sale.

The existing security will remain in place to secure the royalty until replaced by a specific royalty security. Platinum and Cokal will work together to replace the existin` security with a direct royalty security over the IUP licenses to specifically secure the royalty subject to appropriate legal advice.

All Shares controlled by Platinum will be escrowed for 24 months from the date of conversion unless Cokal finds an alternative buyer or Platinum finds a buyer acceptable to Cokal.

All Platinum’s existing Cokal options will not be exercised or otherwise will be cancelled. Cokal will issue 75 million new options to Platinum with a 5 year term and strike price of AU$ 1.6 cents (A$0.016) The transaction is subject to any necessary regulatory approvals or shareholder approvals required under the

Listing Rules.

Formal agreements and documents are being prepared to give effect to the above.

b) On 22 July it was announced: - Cokal has made a private placement to Ramornie Capital Ltd and its associates. The funds raised will provide working

capital for the Company which will enable it to continue to develop funding opportunities for its Indonesian projects. The Company will issue 75 million fully paid ordinary shares in Cokal Ltd at a price of AU$ 0.016 (USD0.012) per share, raising AU$ 1.2 million (USD0.9 million). There were no fees payable by Cokal in relation to the placement.

c) On 8 August 2016 it was announced that Cokal Limited (ASX:CKA, “Cokal” or “the Company”) is pleased to announce that due to the interest in the AU$1.2 million (USD0.9 million) private placement previously announced on 22 July 2016 it has been decided to increase the private placement by AUD0.3 million (USD0.22 million) to AU$1.5 million (USD1.12 million). The placement will provide working capital for the Company which will enable it to continue to develop funding opportunities for its Indonesian metallurgical coal projects. The Company will issue 18.75 million fully paid ordinary shares in Cokal Ltd at a price of AU$0.016 (USD0.012) per share, raising AU$0.3 million (USD0.22 million). There were no fees payable by Cokal in relation to the placement. On issue, the placement shares will rank equally with all other ordinary shares then on issue.


Declaration by DirectorsThe directors of the Group declare that:

1. The financial statements, comprising the statement of comprehensive income, statement of financial position, statement of cash flows, statement of changes in equity, and accompanying notes, are in accordance with the Corporations Act 2001 and:

(a) comply with Australian Accounting Standards and the Corporations Regulations 2001; and

(b) give a true and fair view of the Group’s financial position as at 30 June 2016 and of its performance for the year ended on that date.

2. The Group has included in the note 1 to the financial statements and explicit and unreserved statement of compliance with International Financial Reporting Standards.

3. In the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

4. The remuneration disclosures included in pages 16 to 21 of the directors’ report (as part of audited Remuneration Report) for the year ended 30 June 2016, comply with section 300A of the Corporations Act 2001.

5. The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001.

This declaration is signed in accordance with a resolution of the directors.

Cokal Limited

Peter LynchChairman and Chief Executive Officer

Brisbane27 September 2016


Ernst & Young111 Eagle StreetBrisbane QLD 4000 AustraliaGPO Box 7878 Brisbane QLD 4001

Tel: +61 7 3011 3333Fax: +61 7 3011 3100ey.com/au

Independent auditor's report to the members of Cokal Limited

Report on the financial reportWe have audited the accompanying financial report of Cokal Limited, which comprises theconsolidated statement of financial position as at 30 June 2016, the consolidated statement ofcomprehensive income, the consolidated statement of changes in equity and the consolidatedstatement of cash flows for the year then ended, notes comprising a summary of significantaccounting policies and other explanatory information, and the directors' declaration of theconsolidated entity comprising the company and the entities it controlled at the year's end or fromtime to time during the financial year.

Directors' responsibility for the financial reportThe directors of the company are responsible for the preparation of the financial report that gives atrue and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001and for such internal controls as the directors determine are necessary to enable the preparation ofthe financial report that is free from material misstatement, whether due to fraud or error. In Note1(b), the directors also state, in accordance with Accounting Standard AASB 101 Presentation ofFinancial Statements, that the financial statements comply with International Financial ReportingStandards.

Auditor's responsibilityOur responsibility is to express an opinion on the financial report based on our audit. We conductedour audit in accordance with Australian Auditing Standards. Those standards require that we complywith relevant ethical requirements relating to audit engagements and plan and perform the audit toobtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial report. The procedures selected depend on the auditor's judgment, including theassessment of the risks of material misstatement of the financial report, whether due to fraud orerror. In making those risk assessments, the auditor considers internal controls relevant to the entity'spreparation and fair presentation of the financial report in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of accounting estimates made by the directors, aswell as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.

IndependenceIn conducting our audit we have complied with the independence requirements of the CorporationsAct 2001. We have given to the directors of the company a written Auditor’s IndependenceDeclaration, a copy of which is included in the directors’ report.


OpinionIn our opinion:

a. the financial report of Cokal Limited is in accordance with the Corporations Act 2001,including:

i giving a true and fair view of the consolidated entity's financial position as at 30 June2016 and of its performance for the year ended on that date; and

ii complying with Australian Accounting Standards and the Corporations Regulations2001; and

b. the financial report also complies with International Financial Reporting Standards asdisclosed in Note 1(b).

Emphasis of Matter - Going ConcernWithout qualifying our opinion, we draw attention to Note 1 (c) in the financial report which describesthe principal conditions that raise doubt about the consolidated entity’s ability to continue as a goingconcern. As a result of these matters, there is material uncertainty whether the entity will continue asa going concern, and therefore whether it will realise its assets and extinguish its liabilities in thenormal course of business and at the amounts stated in the financial report. The financial report doesnot include any adjustments relating to the recoverability and classification of recorded asset amountsor to the amounts and classification of liabilities that might be necessary should the entity notcontinue as a going concern.

Report on the remuneration reportWe have audited the Remuneration Report included in pages 16 to 21 of the directors' report for theyear ended 30 June 2016. The directors of the company are responsible for the preparation andpresentation of the Remuneration Report in accordance with section 300A of the Corporations Act2001. Our responsibility is to express an opinion on the Remuneration Report, based on our auditconducted in accordance with Australian Auditing Standards.

OpinionIn our opinion, the Remuneration Report of Cokal Limited for the year ended 30 June 2016, complieswith section 300A of the Corporations Act 2001.

Ernst & Young

Andrew CarrickPartnerBrisbane27 September 2016

BRISBANE OFFICE - AUSTRALIA

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